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The retirement ceiling

The retirement goal for men and women isn't that different: Save enough so you don't outlive your money.

But women have a tougher challenge: They tend to live longer than men, which means they have to make their money last longer.

"They have lots of challenges," said Alicia Munnell, director of the Center for Retirement Research at Boston College. "Women have to work or make sure the household saves a lot of money so they can withstand the loss of the spouse."

Older, unmarried women are most at risk for poverty, according to a draft report by Munnell.

"Of all the factors associated with poverty in old age, the most critical is to be a woman without a husband," she said. "If they're married at retirement, they're basically okay. If they arrive at retirement as a single person, they're usually poor."

For women between 65 and 69, 27 percent of singles are poor, compared with 7 percent of married women, Munnell said.

Women also face the threat of having a smaller pension or no pension, experts say.

"Women traditionally are the ones who will stay home with the children," said Bryan Clintsman, a certified financial planner. "They are in and out of the work force over the span of a career.

"That translates into a smaller or nonexistent pension, because a pension is something that requires consistent and long years of service," Clintsman said. "You start and stop the pension clock too many times, and it never gets a chance to run long enough to accumulate anything."

About 55 percent of men have pensions, compared with 32 percent of women, Munnell said. When women do have pension benefits, they average about half that of men's.

"Women should educate their daughters that they need to be independent and be able to take care of themselves, no matter what," said Carol Doerr, a certified financial planner in Dallas. "Husbands don't live forever."

To make things worse, all industries are not created equal when it comes to pay for women, according to a study by the National Association for Female Executives.

The gender wage gap prevails across 21 fields that the organization analyzed, with men's earnings continuing to average more than $10,000 a year more than women's for identical jobs.

On average, American women who work full time earn 76 percent of what men do, the organization says.

"If you think the wage gap's bad now, just wait," said Betty Spence, president of the association. "Women live longer than men, so we need more retirement savings, but we earn less than men do, so it's harder to save."

It's an acute problem for baby boomer women, she said.

"Women have half of what men have to retire on, and baby boomers are not prepared," Spence said.

Here's how you can help yourself.

Start saving as early as you can. Take advantage of your employer's 401(k), especially if the company provides a match for your contribution. In the end, don't depend on anyone, except yourself, to finance your retirement.

"It's really important that we all take advantage of the power of compounding," Clintsman said. "It's so powerful."

For example, if you're 30 and start saving $100 month at a 7.5 percent annual rate of return, compounded annually, you would have $185,101 when you're 65.

When investing, don't swing for the fences, but neither should you be afraid to stretch a little.

In other words, don't be so conservative that you have all your money tied up in bonds and money market mutual funds that can't keep up with inflation.

"Women in general are risk-averse, but what they really need to do is not gambling but understand prudence in investing, which is much less risky than just investing in the money markets," said Celeste Colgan, senior fellow and an expert on women's issues at the National Center for Policy Analysis, a Dallas think tank.

"Think of the long term and invest in all of the capital markets _ just a very nice balanced approach to investing, rather than just money markets."

If you must go the ultra-safe route, you'll have to deliver on the other end. "If they don't want to be more risk-tolerant, they're going to have to be more aggressive savers," Clintsman said.

If you're a stay-at-home spouse, take advantage of the Individual Retirement Account for a nonworking spouse. If you file a joint income tax return, you're eligible for this spousal IRA. You may contribute up to $3,000 a year.

"They need to have something on their own," Clintsman said. "I see too many examples where one spouse is designated to be the working person in that couple. It puts a lot of risk on the retirement plan."

Know what happens to your husband's pension when he dies. This will depend on what pension payout he chooses when he retires. This is a crucial decision.

Typically, workers have two options on how they want their pension money paid out:

+ The single life option gives a worker pension income for the rest of his or her life. It pays a higher monthly income because it's based on a "single life" _ the worker's _ and payments cease when the worker dies.

+ The joint and survivorship option pays a lower monthly income, but payments continue until the death of both you and your spouse.

"Overall, the joint and survivor option is typically the safest and most sound option for retirees," said Shashin Shah, a certified financial planner at Financial Design Group in Addison. "It may provide a smaller payout than a sole option, but the risk is too great for the nonemployee spouse in case of the employee's death."

Know the rules of Social Security spousal benefits and what you're entitled to. For more information, go to the Social Security Administration Web site at www.socialsecurity.gov/pubs/10127.html.

Finally, women shouldn't get discouraged when it comes to saving for retirement.

"The retirement dream is not dead for women," Colgan said. "The person who gets to retire is the person who plans for it."

CHALLENGES

Retirement planning is crucial for women because of several factors:

+ Women tend to outlive men, so they need to make their retirement dollars last longer.

+ Women tend to get paid less than men, even for the same work.

+ Women often interrupt their careers to have children and care for elderly parents. That hurts their ability to build up a pension because years of service and earnings are two major factors that determine pension payments.

+ Unmarried women are the most vulnerable to poverty.

Sources: Center for Retirement Research, Dallas Morning News research

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