Retirement may hold surprises for women who outlive spouse

MILWAUKEE — James Giegler died at 62 in September 2001, leaving a grieving widow and shattered financial plans.

Giegler had qualified for a pension when he retired from his job as a truck driver two years before his death. He and his wife of 17 years, Marge, had selected an option that ended payments to her a few years after he died.

They could have opted for a smaller monthly pension that continued until the survivor died.

"We sat down and talked about this a lot," Marge said of the choice. "I was hopefully going to retire at 55. He had a pretty good pension, and I would have had a pretty good pension."

Instead, she is now 56 and continues to work, recalibrating her financial future.

Marge Giegler is better off financially than many widows, but her situation illustrates a larger issue. When women hit retirement age, they are much more vulnerable to monetary stress than are men.

The reasons are varied, said Anna Rappaport, a past president of the Society of Actuaries, which recently issued a report on the subject.

Biology is a factor. Women generally live longer than men.

That means "the resources that they have accumulated when they retire are going to have to be spread over a longer period of time," said Karen Holden, a consumer-science professor at the University of Wisconsin-Madison.

But culture is involved, too.

"Married women are likely to outlive their husbands, both because of their longer life spans and because they often marry older husbands," according to the report, "The Impact of Retirement Risk on Women." In fact, 75 percent of women 85 or older are widowed, according to the Washington, D.C.-based Women's Institute for a Secure Retirement.

As with Marge Giegler, one-third of women who become widows do so before 65, according to the institute.

Finally, the resources women bring to retirement tend to be smaller than what men have, because on average, women earn less than men. Furthermore, the careers of women are frequently interrupted for family reasons.

To follow the law, Marge Giegler had to sign off on the pension option her husband chose, but many couples do not communicate about it well, said Rappaport, a consulting actuary in Chicago.

Social Security recognizes the value of a nonworking spouse. If a couple have been married for at least nine months, or 10 years if the pair later divorce, the survivor has a claim on the other's benefits. Social Security pays the survivor only about two-thirds of the benefits given to two people, but "it takes about 75 cents on the dollar to live [the] same as an individual than as a couple," Rappaport said.

About 60 percent of retired women receive enhanced Social Security checks because their husbands earned more than they did, the report found. "In evaluating timing of retirement, beneficiaries often forget that if the husband retires later, it will result in ... a larger widow's benefit," the report says.

As a rule of thumb, a person can take between 4 and 5 percent of their investments to live on every year and not run the risk of running out of money, according to Holden.

The goal for retirees "is not to have the biggest pot of money but to have a stream of income that will last for your lifetime and maintain your purchasing power," said financial planner Paula Hogan.

Social Security is a lifetime annuity indexed for inflation, she noted. The longer a person waits to apply for it, the bigger the initial monthly payment on which inflation indexing is based.

If a person lives into their mid-80s, a greater possibility for women than for men, it makes sense to wait until a few years after retirement to start collecting Social Security, Hogan said.

Marge Giegler is not sure what she will do about Social Security and retirement.

"It is kind of a scary thing to do, especially on your own," she said.

"I never thought walking away from my job would be this difficult when Jim was around."