San Jose Mercury News,  Business,  Sun, Jan. 25, 2004 

`Husbands don't live forever'
 
WOMEN LIVE LONGER THAN MEN,
	NEED TO PREPARE FOR MANY YEARS OF RETIREMENT
	By Pamela Yip Dallas Morning News 
Patti Johnson, a former human resources executive, has
just started PeopleResults, an organizational
consulting firm.

In addition to the myriad tasks she must attend to in
starting a business, Johnson has to consider another
crucial issue -- planning for her retirement.

She and her husband, who also is self-employed, set a
meeting with their financial planner to talk about a
retirement plan that takes into account their
self-employed lifestyle.

``The greatest challenge has been starting this new
business,'' Johnson, who lives in Southlake, Texas.
``You don't have the predictability that you have when
you work for a large corporation.''

Personal finance experts say it's important for all
women to do what Johnson is doing.

``Women should educate their daughters that they need
to be independent and be able to take care of
themselves, no matter what,'' said Carol Doerr, a
certified financial planner in Dallas. ``Husbands don't
live forever.''

The overall retirement goal for men and women isn't
that different: Save enough so you don't outlive your
money.

But women have a tougher challenge: They tend to live
longer than men, which means they have to make their
money last longer.

``Women have to work or make sure the household saves a
lot of money so they can withstand the loss of the
spouse,'' said Alicia Munnell, director of the Center
for Retirement Research at Boston College.

Older, unmarried women are most at risk for poverty,
according to a draft report by Munnell.

``Of all the factors associated with poverty in old
age, the most critical is to be a woman without a
husband,'' she said. ``If they're married at
retirement, they're basically OK. If they arrive at
retirement as a single person, they're usually poor.''

Women also face the threat of having a smaller pension
or no pension at all, experts say.

``Women traditionally are the ones who will stay home
with the children,'' said Bryan Clintsman, a certified
financial planner at Clintsman Financial Planning and
Johnson's financial adviser. ``They are in and out of
the workforce over the span of a career.

``That translates into a smaller or non-existent
pension, because a pension is something that requires
consistent and long years of service,'' Clintsman said.

About 55 percent of men have pensions, compared with 32
percent of women, Munnell said. When women do have
pension benefits, they average about half that of
men's.

To make things worse, all industries are not created
equal when it comes to pay for women, according to a
study by the National Association for Female
Executives.

The gender wage gap prevails across 21 fields that the
organization analyzed, with men's earnings continuing
to average more than $10,000 a year more than women's
for identical jobs.

Here's how you can help yourself.

Start saving as early as you can. Take advantage of
your employer's 401(k), especially if the company
provides a match for your contribution. In the end,
don't depend on anyone, except yourself, to finance
your retirement.

For example, if you're 30 and start saving $100 month
at a 7.5 percent annual rate of return, compounded
annually, you would have $185,101 when you're 65.

When investing, don't swing for the fences, but neither
should you be afraid to stretch a little.

In other words, don't be so conservative that you have
all your money tied up in bonds and money market mutual
funds that can't keep up with inflation.

If you must go the ultra-safe route, you'll have to
deliver on the other end. ``If they don't want to be
more risk-tolerant, they're going to have to be more
aggressive savers,'' Clintsman said.

If you're a stay-at-home spouse, take advantage of the
Individual Retirement Account for a non-working spouse.
If you file a joint income tax return, you're eligible
for this spousal IRA. You may contribute up to $3,000 a
year.

Know what happens to your husband's pension when he
dies. This will depend on what pension payout he
chooses when he retires.

Typically, workers have two options on how they want
their pension money paid out:

��The single life option gives a worker pension income
for the rest of his or her life. It pays a higher
monthly income because it's based on a ``single life''
-- the worker's -- and payments cease when the worker
dies.

��The joint and survivorship option pays a lower
monthly income, but payments continue until the death
of both you and your spouse.

``Overall, the joint and survivor option is typically
the safest and most sound option for retirees,'' said
Shashin Shah, a certified financial planner at
Financial Design Group in Addison. ``It may provide a
smaller payout than a sole option, but the risk is too
great for the non-employee spouse in case of the
employee's death.''