The cards are (seemingly) stacked against women when it comes to retirement. Lower earnings, longer lifespans and often fewer working years—due to family matters—add up to a need for more money than male counterparts in order to retire comfortably.
The best defense is a good offense: consistently contribute to a 401k. But a recent study by the Nationwide Retirement Institute suggests many women approaching retirement age had another plan in mind—and are becoming increasingly concerned it’s not going to pan out the way they had hoped.
Over 60 percent of females ages 50 and up, who are retired or plan to retire in the next 10 years, are counting on Social Security to be their primary source of retirement income. And according to the study, three-quarters of them are worried funding will run out.
“The percentage of women who believe Social Security will run out in their lifetime is the highest we have seen since we started this survey four years ago,” Tina Ambrozy, president of sales and distribution for Nationwide, said in a statement. “Of the future women retirees who said they plan to claim Social Security benefits early, some cited concerns that benefits might be reduced due to Social Security reforms.”
It’s not surprising, then, that the report shows only a quarter of women say life is, or is expected to be, better in retirement than before retirement (down from 31 percent last year). Slightly more than that (26 percent) think it is going to be worse.
Aside from Social Security woes, the report indicates many are concerned about health care costs, as well—as they should be.
“The average American woman claiming Social Security benefits at 62 could spend about 75 percent of their monthly Social Security benefits on health care costs. That’s why it’s so important to consider optimizing Social Security,” explained Ambrozy. “Too many retirees need the money, but few are maximizing their benefit.”
Instead of waiting until age 70 to collect the maximum amount, 74 percent of women surveyed took benefits early. In fact, just 4 percent waited to claim, a separate NRI report indicated.
It’s not all bad though.
“There is reason for concern, but most likely, Social Security is not going away any time soon,” said Ambrozy. “Social Security receives 77 percent of its funding through current payroll taxes.”
Nevertheless, Ambrozy added, “Together, unexpected health care costs and the potential of reduced benefits make optimizing Social Security more important than ever.”
And this is true. But also, we repeat: contribute to a 401k.
Jessa Claeys is a writer, editor and graphic designer.
