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Why Commodity Prices RiseEmail Marketing Business Opportunity - Helen BairstowGender is alive & well -- Part 3.The Easiest way to do a Client NewsletterSetting a Good Example - 2 Ways not to Give in to Whining ChildrenWhy Warren Buffett won't buy a NewspaperTwo issues this weekA How To Book Of Self Managed Super Funds
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Gender is alive & well -- Part 3.

Click here to buy - A How To Book of SMSF's by Tony Negline
Lester Wills

Continuing with the report on the Gender Gap in relation to retirement savings, as evidenced by a recent report from the ING Institute for Retirement Research entitled: "GENDER GAP: Women & Retirement...all is not equal".

Sadly, much of this is no surprise, as even here, in the wealthiest country in the western world, women are second class citizens when it comes to their financial position. ING found that 31 million households in the United States are headed by women, and the financial difference between these and all U.S. households is substantial:

I suspect a similar picture is evident in Australia.

What's more, female-heads of households save less, with 33% reporting not saving at all, compared to 24% of all households. The never-married have the least in reserve, with fewer than half having a savings account or money market deposit account, and those who did having overall $1,100 in the accounts, but reporting typical emergency needs of $2,000.

Only half of divorced or separated women had such accounts, with $1,600, but reported needing $2,500 in the event of an unexpected event or emergency. Further, ING noted that single women are not only at risk for under-funded retirements, but are additionally vulnerable to emergencies and unexpected events, such as job loss, in the event of an economic downturn.

Sadly, these figures are along the same lines as those I found in previous research

The day-to-day burden of ordinary expenses, child-rearing and child-care create additional demands for

the single woman's already lower income, making saving for a distant retirement still less of a priority.

Longer-term, retirement shortfalls may be exacerbated by lower working salaries in general, and the inability to factor in a spouse's Social Security benefits for never-married, or married-less-than-10-years-and divorced women.

Not content with merely reporting the figures, the ING report considers ideas for going forward. As they note, Defined Contribution systems will almost surely evolve, largely in response to the current economic and regulatory environment. They argue however that additional efforts must be aimed

at helping women in particular take firmer and more positive control of their retirement destinies. This was something that I raised in my research and indeed found a way to actually make that happen.

As ING notes, for women the burden is greater but the outlook does not have to be bleak.

Across the world the world there are numerous retirement systems, yet certain problems are common to many, including the vulnerability of women. There are a plethora of proposals from a variety of sources, such as legislators and various industry groups, including expanding the availability of employment connected retirement programs, including adding education. Savings tied to earnings, i.e. savings that come directly from a paycheck as happens in Australia, are savings that do not struggle for priority with daily and immediate financial demands. However, that alone is not the panacea that many proclaim. One merely has to look at the retirement savings gap that exists in the so called "model" system in Australia.

Having said that, approaches whereby people can have money taken directly from their paycheck and placed into a retirement savings scheme have the potential to benefit to women who don't currently have access to employer sponsored retirement investment programs and must rely on their own

incentive and volition to save and invest (something much behavioral finance research and industry data tells us is unlikely for both men and women.) As I noted in a previous series of articles (Is Retirement Saving in the US Really Any Different?), automatic features in employer plans such as enrollment and contribution escalation, are becoming increasingly popular with employers and employees. Such a development is likely to help jump start retirement investment and regular contribution increases.

These features, however, will only go so far and as I discovered in my Doctoral research and as I noted in my previous series on this topic, more is needed to avoid the pitfalls that occur when the individual becomes detached from the process.

More next time in the final installment in this series.

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