Study: Women more likely to live in poverty after retirement

Women are more likely to be impoverished in old age compared to men, according to a new study from Massachusetts Mutual Life Insurance Co. Women retirees and pre-retirees expect to exhaust their retirement savings five years early, while men expect their retirement savings to last beyond their retirement, according to the report.

The average woman makes 84 cents on the dollar that a male worker earns, according to the Economic Policy Institute. In addition to earning less, women tend to live longer than men and are more likely to take time away from the workforce to raise children -- 51% of moms who elect to stay home have no plan for retirement, according to a report from Transamerica Center for Retirement Studies.

Women are also more reliant upon Social Security benefits for income in retirement. On average, women expect Social Security to cover 58% of their expenses while 18% expect their benefits to cover all of their expenses in retirement. This perspective is evidenced in women’s likelihood to collect their benefits early -- roughly 74% of women collect early, which results in lower lifetime income, according to a recent survey from Nationwide Retirement Institute.

As a result, women are at a higher risk for being under-prepared for retirement, but more likely to seek help than men. Seventy-nine percent of retired women are receiving professional financial advice, compared to only 68% of men, MassMutual said.

On average, women retirees and pre-retirees expect to live 25 years in retirement while men expect to live 23 years, according to MassMutual’s Women’s Retirement Risk Study.

Men have more confidence in their retirement savings. Women expect their retirement income to last only 20 years -- five years below their anticipated time in retirement, as compared with men who believe their retirement income will last for 25 years -- a two-year cushion of retirement income.

Women retirees and pre-retirees are less likely to make accurate predictions about how long their savings will last. Forty-three percent of women are unsure how long their retirement savings will last (as compared with one third of men). On average, retired women anticipate living 30 years in retirement, while pre-retiree women expect to live only 21 years, according to the study.

Women anticipated more financial strain in retirement than their male counterparts. A number of factors contribute to the lack of retirement confidence in women. The study found women had lower confidence in areas including managing and optimizing Social Security, replacing a higher percentage of pre-retirement income, managing savings and investments, and taking investment risk, according to the report.

Nearly a third of both men and women said they will need to replace a minimum of 75% of their pre-retirement income when they retire, the study found. Some need even less of their income replaced -- 41% of men and 45% of women said they will need 50% of their pre-retirement income or less, according to the report.

When considering income-replacement requirements, women are more confident than men. Retired women (40%) are more likely to say they need to replace less than half of their pre-retirement income to live comfortably than retired men (28%).

Pre-retirees are more likely to worry about market volatility and mismanaging their investments than retirees, the study found. Women were more concerned about this aspect of their retirement security than men, according to the study.

Women prioritize minimizing risk over investment growth. However, the majority of women (97%), said they want their investments to continue to grow while in retirement. Despite the desire for growth, women are more likely to believe their investments should be significantly more conservative in retirement compared to their male counterparts, according to the report. Women working with a financial advisor said were more likely to say their advisor recommended investing more aggressively, the study found.