Take Charge of Your Own Security

The shift away from traditional pension plans does tend to benefit one group of workers -- women. That's because pensions reward long-term employment with a single company. Women, however, tend to spend less time in the workforce than men do because women take time off to rear children or care for elderly parents.

As a result, the typical college-educated woman earns $523,000 less than her male counterpart over a lifetime, reports a study by the Women's Institute for a Secure Retirement. That amount of forgone income would be enough to buy a 65-year-old woman an immediate annuity paying $36,000 a year for the rest of her life.

Although women earn less than men and accumulate reduced retirement benefits, they live longer -- and often live alone. Among women older than 65, 60% are widowed, divorced or never married. For 25% of unmarried women in retirement, social security is the only source of income. When it comes to retirement savings, women, whether married or single, should forget about knights in shining armor and put their faith in 401(k)s.

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It's especially important to start saving early and aggressively. "Women who are too conservative will end up with a much smaller retirement nest egg," says Dodie Thuene, a senior vice-president with Bryn Mawr Trust, in Bryn Mawr, Pa.

That's the advice Thuene gave Ellen Sanford when Sanford, 53, sought guidance from a financial adviser on how to invest money from a divorce settlement. Sanford did not want to keep the bulk of her money in fixed-income investments (as one group of advisers suggested). Now about 65% of her assets are in a diversified portfolio of stocks, stock funds and exchange-traded funds.

Sanford contributes her salary from a part-time job as a medical librarian to her 403(b) plan. To cut expenses, she's considering selling her home in suburban Philadelphia. She monitors her investments online and, she says, "eventually I want to be able to control my own portfolio."

Marilyn Kennedy, a real estate agent in Scottsdale, Ariz., has been investing on her own since she was divorced 20 years ago. At age 64, Kennedy still leans heavily toward stocks in her SEP account, which includes 24 individual companies and four mutual funds. She also owns rental properties, and she estimates her savings and real estate are worth about $1 million.

Kennedy plans to scale back to part-time work once she reaches her normal retirement age, when she can collect full social security benefits. Despite her success, she's haunted by the prospect of becoming a bag lady. Says Kennedy, "Every woman should know when she turns 65 that the prince probably isn't coming."