Retirement Planning Is Harder for Non-traditional Families

Cecily O’Connor
RedwoodAge.com

Retirement planning is tricky for most people, but adults who are single, or married with children from previous relationships, have an especially hard time saving and investing.

Individuals between 40 and 65 with "non-traditional families" face more challenges, and are less likely to have a clear retirement plan, according to research from the MetLife Mature Market Institute.

Non-traditional families are also more likely to lack 401(k)s, pension plans, annuities and other savings accounts.

While there has been a great deal of attention paid to the role gender plays in retirement planning, family structure is also critical and often overlooked, said Sandra Timmerman, director of the MetLife Mature Market Institute.

Three types of families were examined in the study. They included: traditional families, defined by two parents with children from their current relationship; blended families, or two parents with at least one child from a previous relationship; and single women,  who are widowed, divorced or never-married with or without children.

Among the three groups, blended families and single women are having the most difficult time planning for their retirement, limited by a part-time salary, near-term expenses that need to be paid, as well as customized savings options that fit their lifestyle.

About 56 percent of blended families and 40 percent of single women said they feel at least somewhat prepared, compared with 66 percent of traditional families. A majority of traditional families have a clear idea of what they hope to experience when they retire, compared with  38 percent of single women and 48 percent of blended families.

‘Families Like Mine’
Retirement plan providers and money managers are looking at shifting family definitions in the marketplace. In recent years, there’s also been a big push toward age-based mutual funds and other vehicles that help boomers nearing retirement save and invest based on when they expect to leave the workforce. The thinking overall is that investors want customized financial planning tools that fit "families like mine" or "people like me," rather than generic advice. 

The majority of single women say they are looking for retirement advice and tools designed for them. Forty-five percent of traditional families and 43 percent of blended families feel the same way.

"We should not be ignoring how former spouses, stepchildren and having no children influence savings and income for retirement, as well as estate planning," Timmerman said. 

For example, single women and blended families are more likely to say they know they should be saving more. But they say they don’t know where to start or that other expenses get in the way.

They also are concerned that they lack protection to ensure that an ex-spouse cannot lay claim to income or saving. About 29 percent of blended families and 21 percent of single women consistently contribute to their retirement accounts, compared to 41 percent of traditional families.

Single women, many of whom work part-time, also say they lack the buffer of a second income that many married couples enjoy. As a result, they worry that they won’t have a set level of monthly income to last through their retirement. About 25 percent of single women have no retirement account, almost twice that of both blended and traditional families.

Of course, some planning concerns transcend family structure, especially those that are hard to predict as part of the transition into retirement. For example, healthcare is a critical issue for everyone. Roughly two-thirds of traditional or blended families do not expect to have enough money to cover healthcare costs in retirement, as is the case with 69 percent of single women.

"The challenge for those in middle age is to make the unpredictable elements in their lives – the current and future needs of their children, the assets or income that go to an ex-spouse, their own healthcare and other costs – more manageable," Timmerman said.