5 Reasons Women are Unprepared for Retirement

Women generally live longer than men, but are saving less for retirement.

By + More

Women typically have a longer life expectancy than men, which is more years of retirement that will need to be financed. But women are actually saving less for retirement than men. Here are five ways women are unprepared for retirement.

[See How to Tweet Your Way to Retirement Goals.]

Aiming low. Men set retirement savings goals for themselves that are twice as high as those women aspire to. Men have a median retirement savings goal of $400,000, while women are aiming to save $200,000, according to a Wells Fargo and Harris Interactive telephone survey of 1,756 middle-class households earning less than $100,000 annually.

Less savings. Both men and women are under saving for retirement. The median male in the survey has $25,000 saved for retirement, while the typical woman earning a comparable income has $20,000.

[See 9 Retirement Benefit Changes Coming in 2011.]

Prefer safer investments. Women generally prefer more conservative investments than men. When given a hypothetical $5,000 with the instruction that it be put away for retirement, 40 percent of women say they would purchase bank CDs, compared to 30 percent of men, Wells Fargo found. Men (40 percent) were more likely to say they would invest the $5,000 in the stock market than women (27 percent). “Women don’t seem to feel as comfortable or as confident in investing as men,” says Karen Wimbish, head of retail retirement for Wells Fargo.

Less access to pensions and 401(k)s. Women are slightly less likely than men to be offered retirement benefits at work. Some 76 percent of the men surveyed say they have access to a 401(k) at work, compared to 71 percent of women. And nearly half (48 percent) of the men say they are participating in a traditional pension plan, versus 40 percent of the women. “Although they comprise half the workforce, women have a lower percentage of retirement benefits than men,” says Wimbish. Workers who don’t receive retirement benefits at work need to do even more saving on their own.

[See 6 Retirement Planning Regrets.]

Longer life expectancy. Most married women (83 percent) consider themselves joint financial decision makers with their spouse. But married women need to prepare for the possibility of outliving their husbands. “It’s highly likely that many women will find themselves having to make financial decisions that they didn’t have to while their spouses were alive,” says Wimbish.