Age-Old Question Even More Apt for Women

You have to have confidence in your ability, and then be tough enough to follow through.

- Rosalynn Carter

Planning for retirement is a critical issue for many women.

Although the majority of adult women marry, 85 percent arrive at their final years alone - unmarried or widowed. These women typically earned less than their partners and worked fewer years.

Today's younger generation of women may achieve more economic parity with men, but many older female Americans face a more difficult situation.

Betty, a native New Yorker, is a good example of the need to plan for your golden years. During her 20s and 30s, she walked the runway as a fashion model for one of the elite modeling agencies in New York. She would job hop from one photo shoot to the next, buy designer clothing, and socialize every weekend with friends. Betty kept all her money in a checking account and never gave a thought to saving for her retirement.

At the same time that her modeling jobs slowed down, she met and later married Frank, a rambunctious stockbroker at a big Wall Street firm. Since Frank earned a good salary, Betty didn't need to work. They had no children, and, as Betty says, "Frank said he would take care of me forever, so we lived moment to moment."

Three years ago, Frank passed away, leaving Betty with little retirement savings. They had spent it all on cars, trips, their co-op in New York, and a vacation home in Florida. There was nothing to pay the bills - or support Betty during her retirement.

Betty, now 68, collects Social Security, and her lifestyle has changed to a one-bedroom apartment in a senior-living care center in southeast Florida.

"If it weren't for Frank's Social Security check," she says, "I don't know how I would manage."

Betty's story is not uncommon. In 1988, Social Security accounted for more than 90 percent of the total income for one-third of older women who are unmarried or widowed. And, according to the American Association of Retired Persons, of the 12 percent of elderly people who live in poverty, 74 percent are women.

Women who ignore retirement planning do so at their own peril. Social Security was never meant to finance everything.

Ultimately, we must cover more of the cost of retirement ourselves. Here are a few tips how:

* Before you start tucking away money into a retirement account, build an emergency fund to help if you lost your job. Financial planners often recommend saving three to six months' worth of expenses.

* Start saving. A 25-year-old woman who saves $100 a month until retirement will have six times more savings when she retires than if she begins saving $100 a month at age 45.

* Use a company-sponsored retirement plan, such as a 401(k) or 403(b), if available. Unlike traditional pensions, which pay a fixed rate of return regardless of market performance, you can control much of the risk and reward.

Retirement programs such as the 401(k) are popular, attracting more than $1 trillion to date, all of it destined to fund retirement living. Participation among eligible employees rose from 64 percent in 1986 to 78 percent in 1996.

Women need to be among those taking full advantage. You'll have the option of choosing among different asset classes, such as growth, growth-and-income, and income mutual funds.

Read up on which makes the most sense for you, and check with your benefits or human resources department for information on all the available choices.

Open an individual retirement account (IRA) if you're eligible. Saving $2,000 a year at 6 percent for 30 years in a regular savings account results in $120,900, after paying taxes. But if you shelter your $2,000 each year in an IRA at 6 percent, your fund increases to almost $168,000 because of the tax savings.

* Part of an occasional series.