Live Long. Live Well.

by Joan Cleveland

While living to a ripe old age is something we all aspire to, some telling facts specific to women make it critical for us to become better educated on how to avoid outliving our retirement savings.

We live, on average, up to seven years longer than men do. But did you know as many as 28% of widowed women and 37% of divorced or separated women age 65 and older hover around the poverty level^*?

Share of Divorced or Separated Women Ages 65 and Older Who Live in Poverty^*

Source: T. Smeeding (with J. Gornick and E. Sierminska), "The Social and Economic Vulnerability of Older Women in Rich Countries" (Powerpoint presentation for the Population Reference Bureau Policy Seminar, Feb. 28, 2008: table 5B.1).

You may be able to help make the most of your finances and protect your future by doing the following:

• Waiting till full retirement age to start collecting Social Security. Baby Boomers turning 62 this year can elect to start collecting Social Security. But their benefit will be 75 percent of the full amount they’d receive if they waited till full retirement age. If you can wait till full retirement age, the additional 25 percent that you’ll get can really help.
  
  
• Purchasing life insurance. If your spouse passes away while you’re collecting Social Security, you will be able to continue receiving the higher of the two Social Security benefits, but the lesser benefit will end. And if your spouse has a defined benefit pension payout, that payment may be reduced by 50 percent upon your spouse’s death, depending on the payment option chosen when benefit payments began. This reduction in household income could adversely affect your standard of living. The death benefit from life insurance is one way to supplement that income so that you won’t be forced to downsize your home or lifestyle. 
  
  
• Purchasing an annuity. The cascade of Baby Boomers approaching retirement has resulted in the financial services industry developing products that can help you protect against the risk of outliving your savings. Today’s modern annuities offer living benefits that enable you—and your spouse, if you’re married—to receive a guaranteed income stream for the rest of your life—no matter how long you live.

I recently joined with eight other women for a discussion on the issues surrounding women and longevity. We talked about how the impact of the predicted shortfall of retirement income will weigh more heavily on women than men by nature of the fact that we live longer. It was an important discussion, and I invite you to read the article.

As the saying goes, knowledge is power. For me, it comes down to three things: awareness, education, and working with someone you trust to help protect your future. Let’s keep those golden years golden!

To learn more about women and retirement, read The 2008-2009 Prudential Study: Financial Experience and Behaviors Among Women.

^*Poverty is defined as being income and asset poor. These women survive on less than half of the national median income (income poverty) and had liquid assets that equaled less than one-fourth the national median income (asset poverty). These measures include pensions, public assistance, capital income, and real estate.
Source: Population Reference Bureau, March 2008.

Variable annuities are for retirement purposes and are subject to market fluctuation and investment risk, and may be worth more or less than the original purchase payments. Variable annuities have fees, expenses and annual administrative and insurance charges. All guarantees are backed by the claims-paying ability of the issuer.

Investors should consider the contract and the underlying portfolios' investment objectives, risks, and charges and expenses carefully before investing. This and other important information are in the prospectuses, which can be obtained from your financial professional. You should read the prospectuses carefully before investing.

Life insurance is issued by The Prudential Insurance Company of America and its affiliates, Newark, NJ. Variable annuities are issued by Pruco Life Insurance Company (in New York, by Pruco Life Insurance Company of New Jersey), Newark, NJ and distributed by Prudential Annuities Distributors, Inc., Shelton, CT. All are Prudential Financial companies and each is solely responsible for its own financial condition and contractual obligations. Wachovia Corporation is the majority owner and Prudential Financial, indirectly through subsidiaries, is a minority owner of Wachovia Securities, LLC. Prudential Annuities is a business unit of Prudential Financial. All guarantees based on the claims-paying ability of the issuing company. Our contracts contain exclusions, limitations, reductions of benefits and terms for keeping them in force.