CAMP Money:

Men and women hoping to retire within the next five to ten years are being forced to face a cold truth—they may not be financially prepared to do so. Women are especially vulnerable and lesbian couples even more so. Consider these facts about women from the Administration on Aging:

• In 2001, women make up 60 percent of the population age 60 and older and 70 percent of the population 85 and older.

• Older women are twice as likely as older men to live in poverty and half of the elderly women living in poverty were not doing so before their husbands died.

• Older women are three times as likely as older men to live alone.

• Most older women depend primarily on Social Security for their retirement income, and are half as likely to receive employer pension benefits as men.

• According to the Census Bureau, retirement income for women over age 65 is just over half of the retirement income received by men in the same age group.

The reasons older women find themselves in the financially precarious position are many. Women do not generally make as much money as men do. They frequently interrupt their earning years to raise children. How can older women approaching retirement make up for lost time?

Make retirement a priority. It is common for women to make financial sacrifices during their working years, such as raising children or caring for elderly relatives. Many rely on their husbands for support. The problem is that women outlive men by an average of five years, and thus have more years in retirement to fund. Pensions and Social Security from husbands will drop significantly if the husband dies first, which is why widows often fall into poverty. Unmarried couples have greater problems because Social Security does not recognize them as beneficiaries nor do many private pension plans.

Beef up savings. Women in their fifties or sixties cannot make up for decades of lost retirement income and tax-deferred compounding, but they can at least make up some of the shortfall by saving more. First get into whatever plans you can at work, and put as much as possible into them. Then explore opening an IRA. The IRS now allows greater "catch-up" IRA deposits for those over 50. If still more funds are available consider a tax-deferred annuity to shelter your funds from taxes. Married women can even open an IRA as a non-working spouse. Unfortunately unmarried women cannot.

Qualify for Social Security on your own. Returning to work can beef up a woman’s Social Security benefits for herself. Social Security is based on a 35 year employment history, and even part-time work generates more now than she may have earned decades before.

Know your retirement rights. Married women are guaranteed to continue to receive a portion of their husband’s company pension if their husband dies before they do—unless they sign away that right. Women sometimes do this when the couple decides to take the "single lifetime" option. The single lifetime payments stop when the worker dies. Lesbian or unmarried women should take a hard look at their pension benefits and consider rolling the pension over into an IRA so a non-family beneficiary can be named. From that IRA you can create your own "joint and survivor" pension with a single premium immediate annuity if income is needed.