Sunday, June 22, 1997

Women less financially prepared to retire

By JUDITH BURNS / Dow Jones News Service

WASHINGTON (Dow Jones News) - When it comes to retirement investing, there's a gender gap.

"Men invest more aggressively," said Marcy Supovitz, a vice president for retirement plans at Boston-based Pioneer Funds Inc.

Women often pick investments that offer guaranteed returns over stocks or stock mutual funds, said Mary O'Keefe, a vice president at the Principal Financial Group, in Des Moines, Iowa.

The U.S. General Accounting Office noted in a 1996 report on 401(k) plans that "women tend to invest their pension funds in safer and lower-yield assets than men."

That hurts women later on, since stocks historically generate higher returns than bonds. As the GAO report notes, from 1968 to 1987, stocks returned 9.3 percent a year, while U.S. Treasury bonds returned 7.3 percent a year.

Older women are especially conservative. Among workers in their 50s, the GAO finds, men are almost twice as likely to invest mainly in stocks than women, who tend to favor fixed-income assets such as bonds.

Another problem is women of all ages are less likely to have pension or retirement savings than men, said Michelle Smith, managing director of the Mutual Fund Education Alliance, a Kansas City trade group.

Women who do save typically sock away 1.5 percent of income, said Smith, half the 3 percent of pay that men save, and far short of the 10 percent to 15 percent level recommended by financial advisers.

Financial planners find that worrisome since women generally earn less than men, are more likely to work part time, and change jobs often, reducing their Social Security benefits, pensions and 401(k) plans.

"Women outnumber men in part-time jobs two-to-one, and most part-time jobs don't have a 401(k) plan," said Gail Buckner, a senior vice president at Putnam Investments.

Even time away from full-time work can be costly. Over a 40-year career, Smith estimates that a woman who takes off seven years can cut her retirement benefits in half.

"They're not planning adequately for a retirement that will be longer than their male counterparts'," Smith said.

American women now live to 79, on average, compared to 72 for men, so financial advisers agree they need to save more.

Buckner, a former CNBC-TV anchor who joined Putnam in 1993, spends most of her time talking to women about investing. When they say stocks are too risky, she has a response: "The biggest risk they face is inflation, because of their longer life span."

That's an eye-opener for women investors who are held back by "fear and a lack of knowledge," said Dorothy Clarke, director of the National Center for Women and Retirement Research.

Forget the idea that somebody else will take care of you, Clarke advises. "From her first paycheck on, a woman should be thinking about her retirement, and saving."

Mutual funds are a good way to invest in stocks while reducing risk, Clarke tells women. For those who prefer individual stocks, she suggests joining an investment club.

Fortunately, "women are getting the message," says Buckner. In a recent poll of nearly 2,000 working women, she said, 40 percent told Putnam retirement income is their No. 1 financial worry, twice the number who said they were concerned about reducing taxes.

If women worry about saving, why aren't more of them doing it? One-third said they're relying on their husbands to save for them. Another third said they don't have enough money to get started.

Buckner said these women don't realize they can open some mutual fund accounts with $500 or less, and add $25 a month with automatic deductions from a bank account.

The last group on the sidelines isn't sweating the money, but is "confused and overwhelmed" by all the choices in what Buckner calls "an investment jungle."

For them, she advises: Get a guide.