Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, September 19, 1994 TAG: 9411020001
SECTION: MONEY PAGE: 6 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
DATELINE: LENGTH: Long
Several factors account for this problem, according to the Institute of Certified Financial Planners.
On average, women earn less than men. The difference is significant, the institute said, about 25 percent to 30 percent.
Women also traditionally work fewer years than do men. That's because more of them work part-time or take time out from full-time careers to raise children.
Jumping in and out of the job market, or working only part-time, minimizes pension, Social Security and health insurance benefits.
A survey by the Older Women's League found that 55 percent of working women have employer-provided health insurance, vs. 72 percent of men.
Divorce and widowhood are two other significant factors, the financial planners said.
Many divorced women, often facing the financial burden of raising children without marketable job experience, quickly fall into poverty. Also, some divorced women unwittingly give up the right that they legally have to receive a portion of their former husband's pension benefits after his death.
Women also, on average, outlive men by six to seven years. That raises questions of whether women have saved enough to live comfortably during retirement after their spouses die. In fact, many women depend solely on Social Security benefits. One survey noted that 70 percent of the nation's elderly poor are women.
Studies have shown that women often are not involved in major investment and financial decisions of the household, so they are not as confident as men are about financial matters.
A recent Merrill Lynch & Co. survey on retirement planning found that women were twice as likely as men to have someone else manage their retirement savings and investments.
The same survey found that women save only half as much money as men, and women start saving later in life.
Women also tend to favor more conservative investments and their portfolios are not as well-diversified. The financial planners said those feminine attitudes can hamper the long-term investment growth so necessary for a comfortable retirement.
Certified financial planners and other financial experts concur that women must take several steps to better prepare themselves financially:
Study finances
Seminars - many of them designed especially for women - books, magazines, newspaper columns, broadcast features and resource materials from financial organizations and mutual funds are good introductory sources.
Women of all ages need to learn not only about investments and retirement planning, but also about money management, insurance, taxes and estate planning.
Become involved
Women should participate in their family financial decisions, including taxes and investments.
Just paying bills and balancing the checkbook is not enough. Too often, a woman finds herself suddenly widowed and has no idea what investments her husband made or what to do with the investments if she does find them.
Widows are particularly vulnerable as well to investment scams or inappropriate investment choices, the planners said. Even honest and well-meaning experts can flood a widow with choices she is not prepared to make.
Start your own retirement account
A woman should open her own individual retirement account or participate in a retirement plan at work. Don't depend solely on your husband to provide for your retirement. He may not be there when the time comes.
Establish credit
Women should establish credit in their own names, rather than rely on their husband's credit record. Make sure that joint accounts are building credit history of both spouses.
The Virginia Cooperative Extension Service is a good source of information about handling money. The service offers objective information because it doesn't sell any products.
Charlotte Kidd, senior extension agent for Roanoke, believes that the ability to deal with financial questions varies with the woman.
Those born in the 1950s and later, Kidd said, "are very smart about money, very capable of handling their own affairs." Women born in an earlier era are not quite as knowledgeable and perhaps dependent on their husbands.
A lot of older women don't do anything about learning to handle money until they are shocked into it by a huge change in their lives such as the death of their husband, Kidd said.
Gloria Harris, extension agent in home economics for Botetourt County, said women are more knowledgeable and more interested in financial questions than in the past. Still, she said, many women are not sufficiently informed. Others may feel a lack of self-confidence and prefer to let their husbands handle financial matters.
Harris said the service in the past has offered a Women's Financial Information Program of seven lessons with an information book and outside speakers. The course, developed by the American Association of Retired Persons, attracted more than 100 women from Roanoke and Botetourt counties when it was given last year.
Harris said the course was videotaped, and women may borrow the tapes for viewing. The course covered budgeting, insurance issues, using credit wisely, savings and investments.
In addition, Harris said, local extension offices have books on budgeting, insurance and other subjects that interested people can borrow.
by CNB