The long game: Women need to save more, plan earlier for retirement

When she was working and raising a family in Howard County, Bonnie Bird envisioned retiring in her early 60s and traveling with her husband.

But that path took a different turn after the couple divorced in 1999 and had to divide everything from their home to their savings. Looking toward an uncertain future, Bird worked with a financial planner to map out how much longer she'd need to work and how to start rebuilding her finances. The longtime Glenelg resident relocated to North Carolina, where she'd spent her childhood and could live more affordably.


"It changed how long I felt that I had to work and how much money I need to put away," says Bird, 66, a regional manager in technology sales who expects to work, at least part time, until age 72. "I don't have a matching fund from a partner to pay for those living expenses. It's important to me to continue working as long as I felt healthy doing so, so I could be comfortable and still help my children."

Bonnie Bird, 66, worked with financial planner Kathy Armstrong to rebuild her finances after a divorce. The new plan included working longer and relocating from Glenelg to North Carolina, where the cost of living is lower.
Bonnie Bird, 66, worked with financial planner Kathy Armstrong to rebuild her finances after a divorce. The new plan included working longer and relocating from Glenelg to North Carolina, where the cost of living is lower. (Lloyd Fox / Baltimore Sun)

Women approaching retirement often face challenges they had not counted on earlier in life. Societal shifts, including increased divorce rates, have had far-reaching implications for women and their circumstances as they age, experts say. Women are also more likely than men to trade their jobs for caregiver roles.


About twice as many women over 50 are divorced compared with 20 years ago. Women are outliving men, and women do not remarry at the same rate as men. Experts say women need to save a bigger chunk of their income for retirement than men because they get paid less and live longer, on average.

When they retire, experts say, women are often less prepared and thus, more vulnerable. Studies show that only one-third of women believe they are on track for planning or saving for retirement, though the rest may not be as far behind as they think, says Katherine Bays Armstrong, a certified financial planner with Heritage Financial Consultants in Hunt Valley.

"You always worry you're going to run out of money and be a bag lady on the street," Armstrong says. "It's something with women, regardless of whether it's valid. It's more of an emotional thing."

Women are still overly focused on the everyday when it comes to spending and saving, leaving much of the long-term planning to our spouses or putting it off for another day that often never comes.

That says, the average woman is generally not as well positioned as the average man for retirement, Armstrong says.


"Part of that is by choice," she says. "She chose to stay out of the workforce to take care of kids or left early to take care of parents who are not well. When they get out of the workforce, not only are they not contributing to their retirement, but they have reduced earnings for Social Security."

Women who leave the workforce early to become caregivers to elderly parents or a spouse often find themselves unprepared, lacking adequate savings and potentially without access to health insurance, says Judith Ward, senior financial planner for T. Rowe Price Investment Services.

Women going through divorce should not overlook retirement assets, she says, especially if the husband has been the primary earner saving for retirement, she says.

"Do not shortchange yourself by giving up anything," during the settlement process, Ward says.

Women who have been widowed also need to know about ways in which Social Security benefits can be affected.

For instance, if a husband and wife each received benefits based on their work histories, a surviving spouse would continue to receive only one of the benefits — the higher of the two.

"My mom and dad both had benefits based on their own work histories," with comparable salaries, Ward says. "When my dad passed away, then my mom just received one benefit from that point forward. She was shocked that her Social Security benefit was cut in half."

Women often don't realize they will not continue to receive the same benefit they'd received as part of a couple, Ward says. But it's important to know how the system works long before applying for benefits.

"Decisions have to be made well prior to the event, and you can't go back and redo it," she says. "For the higher earner, the longer they can wait, the higher the benefit will be, and that benefit will become the benefit for the surviving spouse," often the woman.

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When Debbie Cebula's husband died three years ago at age 67, she found herself unprepared financially. Cebula, now 65, a former assistant dean at Goucher College, and her husband, a chief scientific officer at a startup firm, had been building a retirement home in Cape Cod. They also owned a home in Roland Park and leased several cars.

"My husband was doing very well. And we felt comfortable going ahead and building this house without selling the other one," Cebula says. "We did not have a strong financial plan because we had just thought we would go on forever.

"All of a sudden...it was me alone in this big house and a big house out on the Cape," she says. She found out that her husband's firm was no longer required to honor an employment agreement that had promised future compensation.

Working with Armstrong, Cebula devised a plan. Her daughter moved in with her in Roland Park, helping with expenses. She was able to discontinue auto leases in her husband's name. And she managed to keep the house in Cape Cod, which she and her husband had built for retirement, by leasing it as a vacation rental.

"It was a very difficult decision to make," she says. "We had put our heart and soul into the design. This was going to be our forever home. We designed it so we could stay on the first floor into our 90s."

Cebula, who teaches online courses for a graduate program at Goucher, now splits her time between Baltimore and Cape Cod and says her financial plan offered her renewed hope and helped her envision a "new" future.

Maureen Mills, a retired Harford County Public Schools teacher, had to take over the financial planning that her husband had always handled after he died a decade ago. But because the couple had been working with a financial planner for years, she says the transition was easier than she'd expected. They had saved to send their two children to college without debt and had paid off their mortgage. Mills now lives on a retirement pension and Social Security, and is able to travel and do work on her house.

"I had good advisers, and I don't have debt," she says. "Financially, I feel like I'm pretty secure."

For someone who finds themselves suddenly relying on their own resources, the first step is to take control of the budget, to understand expenses and income and how that will change after retirement, says Anna Sergunina, a certified financial planner with MainStreet Financial Planning, which has offices in Odenton, Washington, New York and California.

Though it appears basic, "Unless we pay attention and track it, we don't have a grasp of where the money is going," she says. "Once spending is out of the way, we can talk about goals," such as when to retire and where to live.

Bird, the former Glenelg resident, decided to move to Wilmington, N.C., for a lower cost of living after transferring within her company. Since moving she says she's met plenty of other single women in situations similar to hers.


"The pressure for these women is extremely elevated, more so for women who don't have a partner to share housing expenses for the rest of their lives, or have additional retirement or 401(k)s or Social Security," she says. "You're relying on your own."



Vernita Mouzon rushed back to work several weeks after her first child was born four years ago. Like almost nine out of 10 American workers, she didn’t have paid family leave.

How to get ahead

Women have boosted their earning power, yet experts say they're not always confident about the future as they head toward retirement. Some of that uncertainty has to do with increasing divorce rates, longer life expectancies for women and lower pay over their careers compared with male counterparts. Financial planners say women can take steps to be better prepared for retirement.

Create a financial road map. Plan to spend less than you make, and build an emergency account, says Katherine Bays Armstrong, a financial planner with Heritage Financial Consultants in Hunt Valley.

Save more for retirement than the men in your life. Financial services company TIAA recommends that women put aside 18 percent of annual income each year, compared with 10 percent for men. That's because women often work fewer years than men when they opt to take care of children or aging parents, leaving them with less saved for retirement and lower Social Security benefits.

Determine when to apply for Social Security benefits. You can start taking benefits at age 62, but the amount will increase the longer you wait, with a maximum benefit reached at age 70. Planners advise having a Social Security office estimate your benefit at various ages based on your work history.

Make retirement a priority 10 years early. In the 10 years leading up to retirement, Armstrong recommends building cash reserves to three months for single women and to six months if married. Women should estimate retirement expenses and income, review insurance coverage and make sure they are aware of the date they become eligible for Medicare, at age 65. It's also a good time to review wills, trusts, powers of attorney and beneficiaries.

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