Sunday, May 11, 2008

Mother's Day

It seems almost ironic that on Mother's Day there are more and more warnings that women are less prepared - even seriously unprepared for retirement compared to men.

A recent article in the money section of USAToday titled, Path to Retirement has Pitfalls for Women, brings this home more than I can express. It's a must read not just for women, but anyone who has a woman in their life for whom they care about and wish to see have a long, quality life.

Here's the link to the article:

With gas prices and the basic cost of living increasing at an alarming rate, women are far more vulnerable than men to fall victim to financial unpreparedness, especially once they retire.

So, what's the moral of this blog? If you are a young woman you NEED to start saving for retirement now. Do not play Scarlett and take the attitidue that tomorrow is another day with regard to saving for your future. Yes, tomorrow is another day but today is the best time to start saving. Once you're in the habit of saving for retirement you will wonder why - perhaps even kick yourself that you didn't start sooner. Tomorrow becomes today faster than you think.

According to the USAToday article referenced above, 25% of women have NO retirement savings at all. That's 1/4 of all the women in the United States! That's pitiful for one of the richest countries on the planet, and if you think the government is going to take care of you, you'd better think again. With current deficits at an all time high, the government at all levels will be collecting higher and higher taxes from all of us just to make the interest payments on that debt.

Moreover, with all the federal tax cuts more and more state level governments are looking for money to shore up their debt and pay for programs that were previously kept alive by federal funding. In some cases, state governments have cut programs all together and this is especially noticable in the social services sector such as mental health programs. So at a time when more women who are reaching retirement age need social service programs, the funding for those programs is drying up.

The government approach to our future can be scary and if we managed our money the way the current deficit is being managed we'd all be chastised for running up such large amounts of debt. Wait a minute - I think that's what has happened. The government does it so the rest of us think it should be okay, but look at the financial mess we are all in at the current time and quite frankly, I'm not optimistic about our overall ability to work our way out of this financial mess. Indicators such as a dramtaic increase in homelessness only fuel my skepticism. Please, everyone out there - prove me wrong. I want to be proven wrong!

One of the things that the federal government is banking on is a phenomenon called the Tax Gap. The reason the Tax Gap is being pushed is because politicians are pushing it. Politicians are pushing it because they see the Tax Gap as a source of revenue without having to raise taxes - something that every politician fears doing.

Essentially the Tax Gap is the difference between the taxes collected and those that should have been paid based on current tax law. For 2001 the Tax Gap has been estimated at 345 billion dollars - yes billion! But as my mother was known to say when I was growing up in the 60's - you can't get blood out of a turnip. This money is only useful if it is actually collected. The quesition is - How realistic is it that this money will be collected? The answer will only be told once the collection effort is fully realized. Moreover, Congress will need to provide substantial funding to the Internal Revenue Service (IRS) in order to facilitate this collection process. For more information on the Tax Gap, please see my article at Helium - here's the link:

So, what is a women of today to do? Again, the younger you are the better chance you have for a quality future not dependent on the government but only if you start saving today. Drop the "tomorrow's another day" attitude and pay into your retirement account before you have that next expensive cup of coffee or buy that next pair of shoes you don't need. You can always reward yourself with either of these once you've reached a reasonable financial goal.

For women ready to retire, make sure that you can actually afford to retire. In some cases, working just one more year will make a significant difference and just might keep you from being desperate enough to live out of your car. I was mortified at a recent news cast on the foreclosure mess sweeping this country to see an older couple literally living out of their car because they couldn't afford to pay for their home anymore - a home they had owned for decades.

Pay attention to your Social Security Benefit Estimates form that all of us receive each year just before our birthdays. If you haven't received yours then contact the Social Security Administration and make sure they have your current address. Go to for more information. You are strongly reminded on this form that it's just an estimate so make sure you take that into account.

Continue to read publications and advice I reference in this blog. NEVER take just one perspective. A cross-section of reading materials will give you a better overall sense of how to approach saving for your retirement and how to adapt this overall advice to your personal situation - a crucial element of retirement planning. The more you read and educate yourself, the better able you will be to take care of yourself financially. Something the government doesn't always do so well - so be careful whose example you follow.