Women face different financial challenges than men

For women, it’s a classic "good news, bad news" scenario: The good news is, on average women live seven years longer than men; the bad news is, there’s a strong possibility they may have less money to live on during those extra years.

Although the earnings gap is slowly closing, women still make only three-quarters of what men do for the same jobs, on average. This discrepancy can really add up, since at retirement most people live off the money they’ve accumulated over a lifetime of work. And because women are more likely than men to take time off work to raise children –usually during peak earning years –their Social Security and employer-provided retirement benefits are often much smaller.

Because women tend to invest less aggressively than men, their retirement savings grow more slowly. Throughout a whole career the difference between high-risk and low-risk investments can be enormous.

And, a Consumer Federation of America (CFA) and Visa Inc. survey found that 71 percent of women surveyed said they’d worried about personal finances in the past year, with 66 percent citing their lack of personal savings to cover emergency expenses as the reason (88 percent among women 18 to 24). More than half of women under 34 said they have less than $500 in emergency savings.

The silver lining to these grim statistics is that it’s never too late for women to overhaul their financial strategy to ensure a more secure future. Married or single, you should plan for different scenarios that could impact your income during retirement.

People live longer. The average lifespan has increased by seven years since 1960. Many women now live 20 or more years after retirement, putting a huge burden on their savings. The earlier you start saving, the faster your money will grow, since the interest you earn generates its own earnings, snowballing over time.

The U.S. Department of Labor's Women’s Bureau (www.dol.gov/wb) offers many financial education resources for working women, including a program called "Wise Up" that targets younger women. Another source, Practical Money Skills for Life, a free personal financial management site sponsored by Visa Inc., contains a step-by-step guide to saving and investing your money (www.practicalmoneyskills.com/saving), as well as interactive calculators that help determine how long it will take to reach your retirement goals at varying ages, savings amounts and risk tolerance levels.

Expect the unexpected. Unplanned illnesses or accidents can devastate your finances. See if your employer or any organization you belong to offers long-term disability and accidental death and dismemberment insurance. If not, speak to an insurance broker about obtaining individual coverage. These plans are especially valuable for younger workers whose income-earning potential can be threatened by unplanned events.

Divorce or death of a spouse. Half of all marriages end in divorce and over 75 percent of women are eventually widowed. Thus, many who counted on dual incomes at retirement may have to scramble to make ends meet. If you largely depend on your spouse's income, make sure there’s enough life insurance to tide you over – some experts recommend insurance that will replace at least five years' income.

The bottom line is, take charge of your own financial future - now, while there’s an opportunity to plan for unforeseen circumstances.