Retirement planning is especially important for women, who often need to be much more involved in their families financial planning than they are, experts here say.


Women live longer than men, earn less money, and receive smaller Social Security and pension checks than men, says Greer Bacon, a certified financial planner here who owns Asset Planning & Management Inc. She says that while one person in a family usually handles the finances, its important for both spouses to understand money-related issues.


Its absolutely critical for women to be involved in retirement planning, Bacon says. Its important for women to understand financial planning basics so that they know what their situation is now and what it might be in the future.


Statistics prove the point. On average, women who reach age 65 are expected to live to 85, compared with age 82 for men, says the U.S. Social Security Administration. It says that in 2004, a working-age woman who worked full time earned a median annual amount of $30,000, compared with $40,000 for men, and the average income from Social Security received by women age 65 and older was $9,408, compared with $12,381 for men.


Also in 2004, Social Security provided 53 percent of the total income of unmarried women, including widows, age 65 and older, compared with 38 percent for elderly men and 33 percent for elderly couples, the agency says. In 2002, only 21 percent of unmarried women 65 and older received private pensions, compared with 28 percent of unmarried elderly men.


Womens Social Security and pension benefits are lower than mens because their earnings are lower and they interrupt their careers to raise children, Bacon says. She says pension plans and Social Security base their benefits on years of service and an individuas earnings.


Joel C. White, a certified financial planner here who owns Joel C. White Co., says that since women typically earn less money than men and spend fewer years in the work force, its especially important for single women to start retirement planning early in life. He adds that if a woman is married and her husband is in charge of the familys finances, its imperative that she get involved in the planning process.


Getting involved and getting educated is important, White says. Youd be surprised at how many married women have no idea whats there, how its being managed, or whos managing it.


Since women often outlive their husbands, they can assume extra financial burdens by taking on a caregiver role when their husbands become sick, White says. He says theres a common misperception that when a husband dies, a widows costs decrease, but usually her expenses rise because she might have to hire a caregiver for herself and bring in help to repair things around the house.


Being unprepared for retirement, especially after losing the person who has been in charge of a familys financial planning, has been traumatic for some of Whites female clients, whether they were widows or divorcees, he says.


Women often are overwhelmed, especially when they lose their husband unexpectedly and people come to them wanting money for bills, White says.


Bacon says that when a husband who has managed a familys money dies, its common for a salesperson to try to convince his widow to rearrange the familys financial portfolio.


Just because the husband dies doesnt mean the portfolio needs to be rearranged, Bacon says.


White says that when he works with his clients, he emphasizes cash-flow management, so they will have more income than expenses when they retire. He also stresses the avoiding debt.


White recommends that working women set up an Individual Retirement Account or a 401(k) account, both of which allow them to save from pre-tax income for retirement. He advises married female clients to become familiar with their husbands pension plan.


White advises couples to choose a survivor-benefit option rather than a single life-expectancy benefit from a pension plan, or to make sure that the husband has adequate life insurance. While a survivor-benefit option cuts into monthly income from a pension, it ensures that a spouse will continue to receive income if the participant in the pension plan dies. With a single life-expectancy benefit, the checks stop when the plan participant dies, he says.


A couple better have adequate life insurance, because a widow likely isnt going to be able to get a job and make what her husband was making right away if he was the familys primary breadwinner, White says.


Bacon says federal law requires that a couple choose a survivor-benefit option, unless both spouses decline that option. She adds that she never has advised a client to choose a pension option based on single life-expectancy alone, even if a couple has life insurance.


White says that asset allocation, or the allotting of a couples assets into different types of stocks and bonds, also is important in retirement planning. Women tend to be more conservative during asset allocation by putting more money into bonds than stocks, he says.


Be aggressive about saving and staying out of debt, White says. Dont be afraid to be more aggressive in your investments as well.


Bacon says that although women often are timid about taking risks with investments, they tend to be better investors than men once they become familiar with the investing process.


Women need to realize that it takes a lot of money to retire, and that CDs (certificate of deposits) wont do the trick for them, she says. Once they get the hang of it, though, they tend to be better investors because theyre more thoughtful decision makers, while men tend to be more impulsive.


Richard Tiffany, a financial consultant and certified senior adviser here who owns Tiffany Financial Group, says women also should know their Social Security options if their husband dies or they get a divorce.


When a woman reaches age 62, she can draw on her husbands Social Security, even if he has died or they are divorced, or draw on her own if shes willing to be satisfied with a lower benefit than she would receive if she waited until her full retirement age to draw either benefit, Tiffany says. It might be more advantageous for a woman to draw on her husbands Social Security rather than her own, especially if he has worked longer and received higher wages, he says.


Even though women can receive some income through Social Security or their husbands pension, Tiffany advises female clients to start saving early in life and to secure other sources of income. Even if a young woman only saves $100 a month early in her career then saves more later on, Tiffany asserts, she will have enough money to retire at age 65.


White also emphasizes the importance of saving. He says that if workers stay out of debt and have six months to a years worth of expenses set aside, they almost never will have to dip into retirement plans early.


Contact Emily Brandler at (509) 344-1265 or via e-mail at [email protected].