Retirement: What Women Want v. Reality

An alarming percentage of women seem to be adopting a dangerous retirement planning strategy. According to a recent survey conducted by the Transamerica Center for Retirement Studies (TCRS) nearly half of women expect to keep working past age 70.

Source: Transamerica Center for Retirement Studies

What really jumped out at me is that nearly one in five women is working from the premise she will never retire. As a retirement planning strategy, that's just flat out dangerous. Below is a telling chart from the Employee Benefit Research Institute that I mentioned in an earlier post on the delayed retirement Expectation-Reality disconnect. Today's workers may presume they will work longer before retiring, but data tracking actual retirement ages suggest that may not be realistic:

I appreciate what's at play here. It's easier to implement a plan that kicks the can down the road by just assuming you will keep on working longer, rather than finding a way to save more today. Paying today's bills is hard enough, let alone socking away money for tomorrow's bills. But there's a big risk that women (and to a lesser extent men) are setting themselves up for much hurt down the line.

In a conference call yesterday discussing the survey results, Catherine Collinson, president of the TCRS pointed out that over half of people retire due to a life event that prevents them from working longer. "The reality is that life events may prevent you from working longer," said Collinson. Her advice is to do some contingency planning:

• Put More Away Today. "Save as much as humanely possible," says Collinson. "Don't cut back now because you plan to work longer."
• Re-Examine Your Expenses. "Every dollar saved today is a dollar more for savings."
• Consider Insurance to Fill Your Gaps. Collinson mentioned disability insurance, as well as long-term care Insurance. My MoneyWatch colleague Steve Vernon recently ran a great series on in the ins and outs of long term care insurance.

I'd also throw in a few more strategies to help shore up a retirement plan:

• Increase your odds of staying healthier longer, with a commitment to exercise and a sane diet. That might make it more feasible for you to be physically able to work longer.
• Strategize today how you can best remain employable in your 50s and beyond .
• Keep in mind that when you are in your 60s and 70s, even if you do want to keep working, and even if you can keep working, it's unlikely you'll want to be burning the midnight oil. The more plausible approach will be to work part-time, earning enough to delay or reduce the drawdown on your retirement accounts. (Continuing to put money away for retirement is icing on the cake at that life stage, but not vital.) But part-time is only going to work if you can reduce your living expenses enough prior to moving to part time. That means getting the mortgage paid off , or making the downsizing move.

Related MoneyWatch articles:

Why Women Are Better Investors

Women: How Not to Blow it on Retirement Planning