Women boomers need to plan for retiring alone

(NC)—Women who find themselves single in retirement face increased financial risks, says a new report from the BMO Retirement Institute.

Some may have lived their entire lives as part of a couple, and therefore never put a solid “single retiree” plan into place. A spouse's death or divorce could leave them starkly unprepared.

“Our research suggests that a growing number of Canadian women are retiring alone, and this presents unique set of financial, emotional, and planning challenges,” says Tina Di Vito, director, Retirement Strategies, BMO Financial Group. “Based on our research, many single women boomers are not prepared for the potential effects on personal finances of being found suddenly single and the importance of having a contingency plan.”

For the most part, women still earn less in the workplace, and may have worked fewer years while raising children. This translates to fewer savings and less access to benefits, such as company pensions.

According to the 2006 National Population Health Survey, 43 per cent of Canadian women who have undergone a marital breakup, either divorce or separation, had a substantial decrease in household income, while only 15 per cent of separated or divorced men had a financial decline.

When a spouse dies, the resulting loss of earnings, particularly if the spouse was still active in the labour force at time of death, are usually very difficult to replace.

When it comes to retirement savings, history shows women in particular lean towards GICs as the 'safe' investment option, but there is a real risk of GICs being too conservative, yielding a lower rate of return over the long term.

As a result, many women, especially those without survivor income sources to fall back on, may need to rethink their long-term investment strategy and prepare more actively for the possibility of becoming single in their retirement years.

Source: www.newscanada.com