Planning for retirement may be a little like planning a party. Setting a date for either event is an important first step.
"Setting a target date for retirement appears to be a motivating factor for men in their retirement planning," says Sharon DeVaney, Purdue University assistant professor of consumer sciences and retailing. "Perhaps when women start being more specific about retirement, they too will begin to prepare."
Studies show that men are much more likely than women to plan for retirement. In a study of gender differences in retirement planning knowledge, DeVaney found that 42 percent of the men felt in control of the process of accumulating money for retirement, compared to 28 percent of the women.
DeVaney analyzed data from the national 1996 Retirement Confidence Survey. Phone interviews were conducted with 756 nonretired persons over age 25 -- 384 men and 372 women. The survey was organized by the Employee Benefits Research Institute and the American Savings Education Council.
Comparing retirement with a festive party doesn't seem far-fetched to DeVaney. She views retirement as that reward at the end of the rainbow.
However, that reward is coming sooner for men than for women. On average, DeVaney found that the men in the study selected an age between 61 and 64 to retire. The women, on average, selected an age closer to 65. "Men are retiring earlier than women," DeVaney says, "and financial need seems to be a determining factor in the continued employment of women."
Nationally, in 1993, 47 percent of women aged 55 to 64 were in the work force, an increase from 41 percent in 1978. For men, the figures were 66 percent in 1993, down from 73 percent in 1978.
Now, getting back to planning that party -- after setting the date, knowing how much money you'll have to spend on the event is another important consideration.
In her study, DeVaney found that 39 percent of the men and 25 percent of the women had calculated the amount of money they needed for retirement. "If people don't know how much money they need, they feel less compulsion to forego current consumption in favor of setting aside for the future," she says.
DeVaney says the average person retiring today will need 60 percent to 80 percent of his or her work income during retirement to maintain the same standard of living.
So, how do people prepare for the ultimate end-of-work party called retirement? "They need to educate themselves on retirement planning and set some specific goals," DeVaney says.
And she suggests that planning for retirement is particularly important for women. "Women live longer than men, make less money and receive fewer pensions," she says. She says married women should plan even if husbands don't. "Wives need to tell their husbands that they are going to plan for their retirements -- with or without the men," DeVaney says.
According to a 1995 survey by the National Center for Women and Retirement Research, personality factors were more critical in women's financial decisions than factors such as income, age, or marital or career status. Women who were assertive, open to change and optimistic were most likely to set financial goals and plan for retirement.
DeVaney says there are several sources of information when it comes to retirement planning. Among them:
DeVaney is a certified financial counselor who conducts research in retirement planning, financing long-term health care and financial well-being of the elderly. Her study on retirement planning knowledge appeared in a 1997 edition of the journal Personal Finances and Worker Productivity.
Source: Sharon DeVaney, (765) 494-8300; e-mail, firstname.lastname@example.org
Writer: Beth Forbes, (765) 494-9723; e-mail, email@example.com
Purdue News Service: (765) 494-2096; e-mail, firstname.lastname@example.org
NOTE TO JOURNALISTS: Copies of the journal article are available from the Purdue News Service, (765) 494-9723.
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