Even with a Pension, A Woman Should Save Early for Retirement

Article excerpt

THE number of full-time women workers in the United States receiving pension coverage has reached its highest point ever.

Nevertheless, half as many women as men retiring from the work force receive pensions, and their benefits are typically less than half those of men, according to the Pension Rights Center in Washington.

The remedy, analysts say, is for women to start saving for retirement early. Women should ask themselves: "Do I have a pension, and what am I going to do about this?," says Cindy Hounsell, coordinator of the Women's Pension Policy Consortium in Washington. The consortium is sponsoring a campaign called "Pensions Not Posies," to educate women about planning for retirement.

In order to grow a $500,000 nest egg for retirement, a woman only has to save $1,800 a year if she starts in her 20s, says Martha Priddy Patterson, director of Employee Benefits Policy & Analysis for KPMG Peat Marwick's consulting practice. If a woman starts in her 40s, she says, she must save $5,000 a year. If she waits until age 50, she must save $15,000 annually. (This assumes a 10 percent return.) Reasons to save

Analysts cite several reasons why women need to save early for retirement: First, they earn less money on average than men, so it is more difficult to build adequate savings. Women, more often than men, also go in and out of the work force to raise children, and they change jobs more frequently.

Many women, therefore, are not on the job long enough to become vested in a pension plan. Women over 25 stay with an employer an average of only 4.8 years, compared with 6.6 years for men, according to the Bureau of Labor Statistics. Vesting usually takes five years.

One reason women put off saving for retirement is because they tend to save for family events first, such as children's education, says John Michel, vice president of retirement planning for Merrill Lynch & Co. "That has caused them not to necessarily view their own personal retirement as a priority," he says. …