• Women represent nearly 75% of the elderly U.S. poor.

• Of elderly women living alone, 40% are below or near the poverty line.

• Of widows living in poverty, 50% were not poor when married.

It’s little wonder, then, that a 1997 survey by the Phoenix Home Life Mutual Insurance Company found that women’s estimated net worth at retirement was almost $200,000 less than that of men.
In the same survey, 55% of women feared they would outlive their savings, versus 44% of men. To make matters worse, only 36% of women investors make retirement savings a top priority, versus 46% of men, according to a recent
survey by the Dreyfus Corporation.

Many of the reasons why women trail in retirement savings are now painfully familiar: The average woman lives seven years longer than the average man, earns 25% less when fully employed, and spends about 15% of her working years at home caring for her family. Taking just seven years off during a 40-year career can cut a woman’s retirement benefits in half, according to the Mutual Fund Education Alliance. By some estimates, however, women are out of the work force an average of 11.5 years – versus 1.3 years for men. Time out of the work force, plus a tendency to work at part-time jobs and smaller firms, make women less likely to have company retirement plans. Women who have access to such plans save at only half the rate of men (1.5% vs. 3%).

Despite many workplace strides, a married woman still tends to be more dependent on her husband’s pension plan than vice versa. But when her husband dies, a widow receives only half of the husband’s benefits at best – even though her expenses may be more than half of what they were with her husband alive.
A woman who becomes divorced must arrange for the distribution of the
husband’s pension benefits during the divorce settlement. However, only 27% of divorced women actually collect those benefits, according to the Older Women’s League (OWL). Women who’ve never married have added hurdles to leap.

Lower earnings also mean lower payments from Social Security, the second of three parts in classic retirement planning. Yet, half of American women collecting Social Security today depend on it for 90% or more of their retirement income – versus 29% of men. Social Security benefits for women who are divorced and have spent little time in the work force are frequently not enough to keep these women out of poverty, according to OWL.

Using life expectancy tables (available from the IRS or your financial advisor) estimate how long your retirement might be. It never hurts to add a few years. Sharon Rich, founder of Womoney, a financial-planning firm in Belmont, MA, has her clients build retirement savings as if they’ll live to be 100.

The first step in this process is easy. Contact the Social Security Administration for a copy of your Personal Earnings and Benefit Estimate Statement (Form SSA-7005-SM-SI). Your statement will show the amount of monthly Social Security benefits you can expect if you keep working – at your current income – until the ages of 62, 66, and 70. It will also estimate survivor benefits for a spouse and any children. By getting a copy of her husband’s statement, too, a married woman can estimate what her benefits might be if her husband is the first to die.

The second step may require more digging. It involves asking the human resources departments of companies where you’ve worked for statements of any future payments from “defined benefit” pension plans. This is a good time to find out the age at which you can receive full benefits from your plan. You should also ask whether your benefits will be decreased due to payments from Social Security (a practice known as “integration”) and what rights a spouse has to your benefits if you divorce.

Then look at other retirement savings. This includes money stashed in company “defined contribution” programs – such as 401(k)s – as well as savings in IRAs, Roth IRAs, Keoghs, and tax-sheltered annuities. Add in savings from accounts that are not tax-advantaged, being sure to exclude money aimed at other goals like college for your kids.

Once you have a savings program, remember that taking time off from work, changing jobs, or starting a business may reduce your nestegg. At many companies you must stay at least five years to qualify for full retirement benefits.

When you are eligible for a company plan, use it to the max. Your savings will grow much faster in tax-deferred programs – especially if your company makes matching contributions. If you’re self-employed, set up a SEP-IRA or Keogh and make the largest contributions you can. If your company has no retirement plan, put money into an IRA or a Roth IRA. As with any savings program, advisors say, you should review your progress at least once a year.