Expert Commentary

Why women are special

The last couple weeks, I have seen a lot more written about women. There was a big report presented to the Senate’s Special Committee on Aging the end of July. Here is the biggest take away:

“Specifically, the participation rate for women in any type of plan, defined benefit or defined contribution, declined slightly from 87% in 1998 to 86% in 2009, while the participation rate for men declined from 91% to 87%,”

The report was entitled “Retirement Security – Women still face challenges.” I attach it here.As you know, I post a lot about women. The biggest opportunity for women is around their Social Security strategy. For married women optimizing the survivor benefit can be significant. Remember that Social Security is based on joint mortality. See my previous posts with graphs on joint mortality — remember that a couple that makes it to 62 will have a 85% probability of having one spouse live past 80. This is a magic age where a delay strategy almost always is better for a person.

Anyway, the “rule of thumb” for a couple is the time the spouse with the higher benefits should claim should be based on the life span of the second to die since the higher benefits carry over into survivor benefits.

So, are women special? Of couse, yes. But, the real need is around planning for a longer mortality (planning horizon) that women have.

We have been helping many experts with strategies for women. Call us if you need help.

http://www.gao.gov/assets/600/592726.pdf