Women who are single due to divorce or widowhood face unique challenges in retirement.
Divorced or Widowed? Brace Yourself for These 5 Retirement Challenges
Heading into retirement without a spouse – whether your situation is due to divorce or widowhood – can be challenging enough without having to jump a bunch of gender-specific hurdles when it comes to savings and retirement income.
Divorce poses a “major challenge” to women’s ability to save for retirement, according to “Still Shortchanged: An Update on Women’s Retirement Preparedness,” a report by the National Institute on Retirement Security (NIRS).[1] The same report found that retired widows – especially women over 80 years old – undergo a “marked decline” in income when their spouse dies.
Curious about the challenges divorced and widowed women face in retirement? Click or swipe for 5 obstacles women should factor into retirement planning.
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1. More women outlive a spouse
Women typically live longer than men, which increases a woman’s risk of becoming a widow. By 2030, the life expectancy for women is about 84 years old, compared to 80 years old for men, according to the United States Census Bureau.[2] Not surprisingly, longer lives require more in retirement savings.
However, if a woman is still working when her husband dies, she may not be able to contribute as much as before to retirement savings. If a woman becomes a widow when she’s in retirement, reduced income may force her back into the workforce, at least on a part-time basis.
2. Divorce can hinder retirement savings
Married women between the ages of 18 to 64 fare better on retirement preparedness than widows and divorced women, according to the NIRS report. The younger a woman is when she divorces, however, the better her chances of being able to save for a comfortable retirement – and she may even be better off if she never remarried.
“Women who divorce early in life, keep their house in the divorce, and remain single for the remainder of their lives are more likely to accumulate sufficient savings to maintain their standard of living in retirement,” according to the NIRS.
Find out: 7 Ways the Gender Pay Gap Affects Women in Retirement
3. Your ex-spouse may get part of your retirement savings
Depending on the divorce settlement and the state where you live, your ex-husband may be entitled to a portion of your employer-sponsored 401(k).[3] He could also receive part of your IRA, pension or other retirement plan through a Qualified Domestic Relations Order (QDRO) ordered by a judge.
While you may not want to see half of those hard-earned retirement savings go to your ex, take heart, since splitting retirement savings in a divorce is a two-way street. You may also be entitled to a portion of your ex-husband’s 401(k), pension or other retirement plan.
Find out: 7 Pros and Cons of Investing in a 401(k) Retirement Plan at Work
4. Widows and divorced women rely more heavily on social security
Married women surveyed relied on Social Security benefits for around 50% their retirement income, according to the NIRS report. But Social Security benefits comprised 53% of divorced women’s retirement income and nearly 60% for widows.
Find out: 6 Reasons to Delay Retirement
5. The gender pay gap affects retirement income
While employed, women earn only about 83% of what men earn and receive only about 80% of the retirement income most men receive, according to the NIRS report.
While that pay gap exists no matter what marital status a woman holds, having one less household income due to divorce or the death of a spouse can seriously impact a woman’s ability to save as much as she needs for retirement.
This article by Deb Hipp was originally published on Debt.com.
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Published by Debt.com, LLC
