Women And Retirement Savings
Planning and saving for retirement may seem like goals that are far in the future. Yet saving, especially
for matters to women – and especially to you!
Do You Know?
• Women are more likely to work in part-time jobs that don't qualify for a retirement plan. And working women are
more likely than men to interrupt their careers to take care of family members. Therefore, they work fewer years and
contribute less toward their retirement, resulting in lower lifetime savings. If you work and if you qualify, join a
retirement plan now.
• Of the 62 million wage and salaried women (age 21 to 64) working in the United States, just 45 percent
participated in a retirement plan. Remember, even small amounts can earn interest and add up over time.
• On average, a female retiring at age 65 can expect to live another 19 years, 3 years longer than a man retiring
at the same age. Savings can increase a woman's chances of having enough money to last during her retirement.
• By and large, women invest more conservatively than men. Choose carefully where you put your money and
learn how to make your investments grow.
Start Here...Start Now
Here are eight questions to help you think about retirement and take charge of your financial future:
Do you work for an employer that offers a retirement plan?
If your employer offers a retirement plan, join it as soon as you can and contribute as much as the plan allows. Most
employers with a 401(k) plan match a fixed percentage of the employee's contribution. The most common match is 50
percent of the employee's contribution up to a maximum percentage of wages or salary (usually 6 percent). The
majority of employers offer 50 percent or more. That's like getting free money! While all job categories may not be
included in your employer’s plan (those of part-time or temporary workers, for instance), your job may be one that is.
Remember, by saving early you have time on your side. Your savings will grow and your earnings will compound over
Have you worked at the job long enough to earn retirement benefits?
In many companies, you may have to work for 5 years to become eligible to receive retirement benefits. Some
workplaces have a shorter vesting period (vesting simply means that you have worked long enough to earn the right
to benefits from a savings or pension plan).
Too often employees, especially women, quit work, transfer to another job, or interrupt their work lives just short of the
time required to become vested. Ask the personnel office, retirement plan administrator, or union representative
about the vesting period and other details of your company’s plan.
Do you keep copies of the documents that define the provisions of your retirement plan?
In addition to asking questions of company or retirement plan officials, you should keep copies of the summary plan
description (SPD) and any amendments. The SPD is a document that retirement plan administrators are required to
prepare, and it outlines your benefits and how they are calculated. The SPD also spells out the financial
consequences – usually a reduction in benefits – if you decide to retire early (earlier than age 65 in many plans). You
probably received a copy of the SPD when you joined the pension or savings plan, but you may request another one
from your employer or plan administrator. Also remember to keep retirement-related records from all jobs. They
provide valuable information about your benefit rights, even when you no longer work for a company.
What happens to your retirement benefits if you change jobs?
You may lose the retirement benefits you have earned if you leave your job before you are vested. However, once
vested, you have the right to receive benefits even when you leave your job. In such cases, the company may allow,
or in certain cases may insist, that you take your retirement benefits in a lump sum when you leave. However, other
companies may not permit you to receive your money until retirement. The rules for your plan are spelled out in the
A word of caution: If you receive your retirement benefits in a lump sum, you will owe additional income taxes, and may
owe a penalty tax. A better way is to reinvest your savings in another qualified retirement plan or an Individual
Retirement Account (IRA) within 60 days. You avoid tax penalties and you keep your long-term retirement goals on
If you do want to reinvest the money, it is important that you do not directly receive it. If you receive the money
directly, you will have to pay a 20 percent withholding tax on the amount you receive and then file for a refund in the
next year, providing proof that you have transferred the funds to an IRA. Instead, instruct the retirement plan to
transfer your money directly to an IRA you have established or to another qualified retirement plan. This is easy to do
using simple forms supplied by the new plan. If you want help with the forms, representatives of the plan are generally
available to assist you.
Do you know how you can save for retirement even if you don’t belong to an employer-sponsored
Anyone receiving compensation or married to someone receiving compensation can contribute to an IRA. In addition,
if you are self-employed, you can start a Simplified Employment Plan (SEP) or a Savings Incentive Match Plan for
Employees of Small Employers (SIMPLE).
As with other retirement savings plans, there may be tax consequences, and possibly penalties, if you withdraw your
Are you tracking your Social Security earnings?
More women than ever work, pay Social Security taxes, and earn credit toward a monthly income at retirement. These
earnings can mean some income for you and your family in the form of monthly benefits if you become disabled and
can no longer work. If you die, your survivors may be eligible for benefits. In addition, you may be eligible for Social
Security benefits through your husband’s work and can receive benefits when he retires or if he becomes disabled or
dies. Special rules apply if you and your husband have been employed and both have paid into Social Security.
Special rules also apply if you are divorced or if you have a government retirement plan.
To calculate your benefit estimate, visit the Social Security Administration’s Web site.
Are you entitled to a portion of your spouse’s retirement benefit if you and your husband divorce?
As part of a divorce or legal separation, you may be able to obtain rights to a portion of your spouse’s retirement
benefit (or he may be able to obtain a portion of yours). In most private-sector plans, this is done using a qualified
domestic relations order (QDRO) issued by the court. You or your attorney should consult your spouse’s plan
administrator to determine what requirements the QDRO must meet.
Are you aware of the rules that govern your retirement plan and the retirement plan of your spouse if
either of you dies?
The rules are different for defined contribution and defined benefit plans.
If you or your spouse belong to a defined benefit plan (a traditional pension plan), the surviving spouse may be
entitled to receive a survivor benefit when the enrolled employee dies. This survivor benefit is automatic unless both
spouses agree, in writing, to forfeit the benefit. You will need to check the SPD or consult with the plan administrator
regarding survivor annuities or other death benefits.
If you are a beneficiary under your spouse’s defined benefit pension plan, you may want to request a copy of the SPD
and other plan documents that describe your spouse’s vested benefits. You will probably want to make the request in
writing, and you may be charged a fee for the information.
The rules may be different if you or your spouse participate in a defined contribution plan (such as a 401(k) plan).
Consult the plan administrator for details about spousal rights.
It's Up to You
Once you’ve answered these questions, you’re on the road to learning more about financial freedom. As a resource
for women (and men), the Employee Benefits Security Administration has issued Savings Fitness: A Guide to Your
Money and Your Financial Future and Taking the Mystery Out of Retirement Planning. The booklets include
resources and Web site sections (see the Resources section to get a copy).
U.S. Department of Labor
Employee Benefits Security Administration
Publication request line: 1.866.444.EBSA (3272)
Web site: www.dol.gov/ebsa