Women in their 50s who are at the most financial risk in retirement are those who are married and in two-income households. That’s the surprising news from a recent report on women and retirement from Prudential Financial.
The finding is based on research of women ages 50 to 59 from the Center for Retirement Research (CRR) at Boston College. According to CRR’s National Retirement Risk Index, 46% of married women in their 50s in two-income households are at risk of being unable to maintain their standard of living in retirement vs. 32% of married women that age in one-income households and 39% of women in their 50s who’ve never been married.
To be frank, these statistics were somewhat unexpected to me. I’ve spent decades reporting on the challenges surrounding women and money. And I researched the financial vulnerability of divorced and widowed women for my book Money Confidence: Really Smart Financial Moves for Newly Single Women.
Why Certain Women Are at Greatest Retirement Risk
I’d have thought — and you might have, too — that married women in two-income households have a leg up for retirement security over their single, one-income household counterparts. There are, however, several root reasons for the study’s results.
“Two-income households typically make more, but save less,” says Cindy Hounsell, president of the Washington D.C.-based Women’s Institute for a Secure Retirement (WISER) nonprofit and a Next Avenue Influencer In Aging. “They are living a two-income standard of living and spend more on expenses — two cars and a bigger house, for instance — so I’m not that surprised. They’re having a nicer life while it is going, rather than saving for retirement. There’s a bit of denial when it comes to retirement planning.”
Married women in two-income households also often aren’t saving as much as they could in workplace retirement plans.
In half of the two-earner couples surveyed, only one earner is covered by an employer retirement plan, according to Prudential. And the partner who is covered typically doesn’t increase his or her retirement plan contributions to offset that circumstance.
Women and Retirement Savings
The average 401(k) savings rate for one-income households and two-income, two-saver households is typically around 8% to 9% of household earnings, CRR says. But the average savings rate for two-income, one-saver households, it found, is only 4.9% of household earnings.
A new T. Rowe Price 401(k) survey said that boomer women have a 401(k) savings balance of $59,000, much less than half of the $138,000 median balance of boomer men.