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Harsh statistics should propel women to plan ahead

Updated: May 3, 2013 12:14PM

Originally published: August 7, 2001

We’ve come a long way, as the popular slogan announces. But not all of the road has been a positive one. That fact was highlighted in last week’s report that women represent an increasing share of bankruptcy filings.

The report said that during the last year, women represented 39 percent of bankruptcy filings, compared with 28 percent for men; 33 percent of the filings were made by married couples.

The statistics may be a result of the increasing number of women in the work force or the increasing number of adult single women. Some survey analysts attribute the higher filings for women to the high divorce rate. But however you analyze the figures, one conclusion is inescapable:

Even in the best of economic times, women are bearing a disproportionate burden of financial agonies, and single women fare even worse. There’s a strong message in that report, especially for young women just entering the work force: Financial responsibility is a long-term and important component of success in the business world. This is not meant to be a polemic about women and equality. But the statistics speak for themselves. Women live longer - between five and six years longer - than men. So they’re more likely to be single at some point in their lives.

That means today’s decisions about money management and retirement investments become far more significant in the long run.

Women make up 75 percent of the elderly poor today. Perhaps that’s because one of every two women over 65 is divorced or widowed. And here’s another shocking statistic from the General Accounting Office: 80 percent of women living in poverty were not poor before their husbands died. These women come from a generation that was not encouraged to learn about financial issues, and they had little opportunity to create economic independence.

The bankruptcy statistics did not break out the filings by age groups, but there are many numbers to indicate that older women are falling further behind. Pensions received by female retirees in the mid-1990s were, on average, less than half those received by men. The median pension benefit for men was $9,600 vs. just $4,800 per year for women. That reflects the fact that older women spent far more time out of the work force than men of the same age. Women left jobs to care for children or parents and lost pension benefits calculated based on time on the job. Older, unmarried women get 51 percent of their income from Social Security - a far higher percentage than men.

When you consider that the average Social Security check in 1999 is only $780, you can understand the difficulties these women have just getting by. Anna M. Rappaport of William M. Mercer Inc., the actuarial firm, recently testified before Congress on Social Security reform options and their implications for women. Notes Rappaport: ``Women live longer, earn less, have fewer retirement assets, and suffer longer periods of debilitating illness in their old age.’’ Many financial problems faced by women are created by divorce.

According to the National Center for Women and Retirement Research at Long Island University, an average woman’s standard of living drops 45 percent in the year following a divorce, while a man’s actually rises 15 percent!

The numbers reflect the fact that women are often left with unproductive and expensive assets like the family home, while men are more likely to leave with substantial and growing retirement plans.

Even today’s generation of young women, who can be expected to learn from the mistakes of their elders, are not immune to these financial disparities. The latest figures show that women still earn only 76 cents for every dollar earned by men. Of course, these numbers may reflect an older generation of women who are still less well rewarded than today’s young professional women. The subject of pay equality is best left to feminists and economists.

The real issue for today’s working woman is the importance of creating a separate, well-funded financial plan to reverse the statistics about the poverty of older women. There are some lessons for working women in these numbers: Start and contribute to your own retirement plan. Even non-working spouses can put up to $2,000 in an IRA every year.

Don’t count on receiving benefits from a spouse’s retirement plan. Set aside and manage your own money, even if most of your assets are contributed to a joint checking account.

Single women need to take even more control over financial planning issues, remembering that there will be no one to rescue them from their inevitable mistakes. Women in the midst of divorce should always get their own financial adviser, so they are left with the productive assets instead of the emotional ones.

Women whose spouses are retiring should never sign off to reject widow’s benefits in favor of a larger current check while the husband is still alive. In financial planning we always like to say that it’s never too late to start over.

But time is on your side if you learn money lessons early. We have come a long way in getting the jobs and getting the benefits that go with better jobs.

Terry Savage is a registered investment adviser for stocks and commodities and is on the board of directors of McDonald’s Corp. and Pennzoil Co. You can send her questions via e-mail at Her second book, published by HarperCollins, is Terry Savage’s New Money Strategies for the ‘90s. Copyright Terry Savage Productions.

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