Make less! Save more!

Planning to retire at 65, ladies? Think again.

Published July 10, 2008 1:43PM (EDT)

With the economy stuck in the doldrums and gas at more than $4 a gallon, it's a miserable time to talk about saving for retirement. Yet, I can't pass up this new study from Hewitt Associates, a human-resources consulting firm. Hewitt examined the projected retirement levels of nearly 2 million employees at 72 large U.S. companies and found that -- drum roll -- "women are much less prepared to retire than men."

The short version: Women make less than men, yet live longer -- on average three years longer. That means that we need to save a greater percentage of our incomes to be able to retire without seeing our standards of living plummet. We need to save more to plan for those three extra years. Using data from these big companies, the Hewitt study attempts to calculate how much more.

The average corporate woman in the study earned $57,000, while the average man earned $84,000. Despite the great disparity in income, the study found that both female and male workers were on track to replace about 85 percent of their pay at retirement. But given inflation and rising healthcare costs, that's not enough, especially after factoring in women's greater longevity. Here's the bottom line: Hewitt found that women should be saving a full 2 percent more than men, annually, over 30 years.

But that's not happening. The study found that women start saving for retirement on average two to four years later than men do, which over time can make a big difference: "Women could potentially increase their nest egg by 18 percent simply by investing 2 years earlier than they do now, or 23 percent by investing just 4 years earlier." Women in the study also put a smaller percentage of their pay into 401K plans than the men did. They're less likely to contribute enough to receive matching funds from their employers, which is like turning down a pay raise. Plus, they invest the money that they do sock away less aggressively than men do.

As I've written before, it's easy to see why saving for retirement slides to the bottom of the list when you're trying to find the dough to afford rising education, housing, transportation, healthcare and child-care costs. Yet, one alternative to saving more for retirement sooner is, of course, working longer. Here's Hewitt: "While most employees estimate they will retire by age 65, working just 2 years longer to age 67 can increase projected retirement replacement income levels by 13.5 percent for women who contribute to their 401(k) plans."

Think of 67 as the new 65. I just hope I won't be spending my so-called golden years writing about how 69 is the new 67, and 71 is the new 69 and so on.

By Katharine Mieszkowski

Katharine Mieszkowski is a senior writer for Salon.

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