I have done and continue to do research into women and money. One thing I have discovered is things tend to get a whole lot worse the older women get. Unless you’re enormously wealthy or are already "socking away" a lot for retirement, chances are your "golden years" will be anything but. In case you hadn’t heard . . .

This statistic shocked me when I first read it, and I wanted to know what it really meant. It turns out that only 5% of Americans at age 65 have annual incomes in excess of $25,000 a year. Now, in many places $25,000 a year won’t cover even basic living expenses. Would it cover yours?

But wait, the bad news gets worse. If you’re a woman, you are highly likely to be forced to live on even less. Women on average still earn 25% less than men, yet they need to save more for retirement because they will live longer than men by about seven years. Women are also less likely to have a steady income stream; a recent study conducted by the U.S. Department of Labor found that women are the ones hurt most in corporate downsizing. It takes women longer to find new work, and the jobs they get are often part-time with less pay than their old occupation. In addition, women are more likely to move in and out of the work force due to child-rearing and caring for elderly relatives (spending 11.5 years off the job on average, versus only 16 months for men). Due to all of these factors, women’s accumulated pension benefits are often lower than men’s. That is, if they receive a pension at all: Only 22% of women over 65 receive a pension, compared to 50% of men. Fifty-two percent of working women receive no pension benefits at all upon retirement because they did not work for an employer with a pension plan!

What does all this add up to—or, more accurately, not add up to at retirement? The average income level for a woman over the age of 65 today is less than $7,000 a year. You can’t live on that—no one can. Eighty-five percent of today’s poverty-stricken elderly are women. Sure, it’s great that as a woman you’ll live longer than men, but the question is, what quality of life will you have if you are trying to live on less than $7,000 a year?

God forbid you should count on Social Security to be your retirement plan. Did you know the average monthly Social Security check in 1996 for a 62-year-old woman is less than $650 a month? (If you don’t believe me—ask someone who’s on Social Security.) That’s assuming you’ll be able to draw anything at all by the time you reach retirement age. In my "Smart Women Finish Rich" investment classes when I ask women in the audience, "Do you think Social Security will be around when it comes time for you to take money out?" very few women say yes. Most people today (including a large number of economists) don’t believe Social Security will be around in twenty years. Even government studies say that by the year 2020 if we don’t do something drastic, Social Security will be bankrupt.

Bankrupt or not, Social Security was never created to be a government retirement plan—and it sure isn’t one today. For most people Social Security makes up less than 18% of their retirement income. Think about it: That’s only 18 cents of every dollar you need to retire. You have to come up with the other 82 cents. Do you know where it’s going to come from?

After all I’d learned about how important it was for women to take charge of their own finances, and about the possible consequences of failing to plan and take action and prepare for the future. "To take control of my own financial future, how do I get started," you might ask.

Change can sometimes be difficult. In fact, many people live their lives going nowhere and doing nothing because of their fear of change. To change takes leverage: It has to hurt so much that finally you can’t take it anymore and you say, "Enough is enough. I’m mad as hell. I want my life to be different!" Whether you want to make massive changes or simply want to check in and see if you are doing the right things to have a financially abundant future, I promise you that my book, Smart Women Finish Rich: 7 Steps to Achieving Financial Security and Funding Your Dreams, will give you the tools you need to take your financial life to the next level.

No matter what your current age or financial condition, it’s time for you to take charge of your own financial future.

©1999 David Bach, Orinda, CA. All Rights Reserved.

This article is excerpted from David Bach’s Smart Women Finish Rich: 7 Steps to Achieving Financial Security and Funding Your Dreams book (Broadway Books). David is one of the country’s leading financial advisors and educators. A senior vice president of a major New York brokerage firm, Bach is a partner of The Bach Group in Orinda, CA, which manages more than $600 million for individual investors. Visit Bach’s website at www.finishrich.com or call him toll free at 877-ASK-BACH.