Why Are Female Baby Boomers Working Longer?

You’ve come a long way baby – but are you ready to retire? According to new research from Transamerica Center for Retirement Studies, women are at a greater risk of not achieving a financially secure retirement compared to men. Female Baby Boomers nearing retirement who may have taken time out of the workforce to raise their families are finding their nest egg isn’t quite as full as it should be.

Lule Demmissie, managing director of investment guidance at TD Ameritrade, says, “There’s no way around it – female Boomers need a bigger nest egg when they retire and they need to do it themselves. Now.” Demmissie discussed with FOXBusiness.com what female Boomers need to do to reach their retirement goals.

Boomer: Why are female Baby Boomers working longer?

Demmissie: The traditional view of retirement divides life into two clearly defined stages: working then playing. But times have changed thanks to the lingering effects of the Great Recession on American retirement accounts, the disappearance of pensions and the uncertainty of Social Security benefits. Many Boomer women are either staying in their jobs past the age of 65 or they are adding a third phase – a “retirement transition” of sorts that might include an encore career or part-time work.

Collecting paychecks into retirement has plenty of pluses. But it also can cost money—in work-related expenses, lost Social Security benefits and added taxes. Another thing to keep in mind, is working can possibly put you into a higher tax bracket in retirement, so I recommend talking to a financial professional who can help you crunch the numbers. For many Boomers, however, it will remain necessary to continue working. This is true for women in particular.

Boomer: What can female Boomers do to protect their savings?

Demmissie: In order to protect their money, women should not put all of their nest eggs in one basket. In stock investing we hear the word diversification so often, but it really applies to all areas of personal finance. By diversifying savings, checking and investment accounts, as well as keeping a close eye on credit scores and debt, women can create financial buffers that will protect their money in the event of significant life changes. Life insurance and legacy planning are also important. They might be gloomy subjects, but they can create additional buffers that can help protect your family’s financial security.

Boomer: In order to secure a more comfortable retirement what should females do?

Demmissie: Boomer women are certainly in a complex position. The recession was a major financial setback for many. For individuals who feel they are behind in saving for retirement, there are a few options available.

They can potentially work longer, which I mentioned earlier. They can take advantage of catch-up contributions and increase contributions to IRAs or 401(k)s beyond the usual limits in the years leading up to retirement. They can sell or downsize their home to tap into home equity. It might seem like a big mountain to climb in a short amount of time, but a little creativity and discipline can go a long way in helping women catch up and be more comfortable during their retirement years.

Boomer: Why is it that women have two thirds less than men in their nest egg?

Demmissie: One key reason is persistent earnings inequality in the workforce. This has kept women underfunded for retirement. Because women tend to live longer than men, they need to set aside more for retirement, yet men’s balances are, on average, higher than women’s. Historically women have demonstrated risky investment behavior. This behavior can have a downside in the early years of investing when time is on their side and they can take advantage of the trade-off between volatility and growth.

According to research two-thirds of women (63%) say they have no savings or less than $10,000 in retirement savings, compared with just over half (52%) of men. As the wage gap continues to narrow—and I’m confident it will as we all advocate for equal pay—women must ensure that the retirement gap narrows as well by taking ownership of their financial goals and planning accordingly for the future.