Without adequate planning, boomer women are at a significantly higher risk than their male counterparts of ending up in poverty in retirement. Mary Quist-Newins, a certified financial planner, State Farm Chair in Women and Financial Services and an assistant professor of Women’s Studies at The American College, Bryn Mawr, Pa., delivered this cautionary message during a session at the National Association of Insurance and Financial Advisors’ annual meeting, held here last month.

“The sad reality is that many American women retire poor,” said Quist-Newins. “Three out 4 Americans living below the poverty line are women. It’s a retirement nightmare.”

Particularly alarming, she added, is the fact that 80% of widows living in poverty were not poor when their husbands were alive. And significant percentages lack a basic understanding of financial concepts. Fifty-nine percent, 47% and 46% of those polled in an American College survey, for example, were not well acquainted with annuities, mutual funds and long-term insurance, respectively.

While 93% of boomer women say that saving for retirement is their primary investment goal, 47% are not contributing to a retirement plan. And only 30% have tried to understand how much they will need in retirement.

Quist-Newins further noted that 80% of women surveyed in a Prudential Financial study said they expected that Social Security would serve as their primary source of income. Women retiring today represent about two-thirds of all Social Security beneficiaries.

Hence the need for boomer women, and their advisors, to understand Social Security provisions that often get left out of retirement planning. Quist-Newins observed, for example, that a woman seeking a spousal benefit is eligible to receive up to 50% of her husband’s retirement benefit.

“The wife has to wait until her full retirement age to get the full 50% benefit,” said Quist-Newins. “So even if my husband retires early, say at 62, as long as I wait until my full retirement age, 67, I’d still get 50% of his full retirement benefit. I don’t get penalized for him taking his benefit early. Also, I would be eligible to receive the greater of the benefit on my own earnings or my spouse’s earnings.”

Respecting Social Security survivor benefits, Quist-Newins said a widow would be entitled to 100% of her deceased husband’s retirement benefit upon reaching full retirement age. Also, a divorced spouse who had been married 10 years or longer can receive the same benefit so long as she doesn’t remarry before age 60.

Those boomer women who opt to take their Social Security income late can expect an increased payout. Upon reaching full retirement age, the benefit rises 8% per year for each year the spouse waits to take benefits. After age 70, there is no additional increase for deferring. But Quist-Newins cautioned against holding out too long.

“A common rule of thumb, waiting until age 67 or 68, can be dangerous for women because the rule is based on unisex rates,” she said. “You’re gambling in huge way on a guess as to how long you’ll live. It’s critically important to quantify the difference between taking benefits early or late.”

A little-known provision of the Social Security program, she added, lets participants begin receiving payments and, should they later decide they don’t need the income, pay the government back without interest. They can also defer their own benefit–and thereby increase the annual payout–while taking a spouse’s benefits immediately.

Turning to qualified benefit plans, Quist-Newins said women typically have a lower participation rate and save less than do their male counterparts. Whereas 43% of men have accumulated over $100,000 in a 401(k) plan, just 27% of women have, according to a Scudder-Kemper survey. One reason: Women spend on average less time in the workforce as they care for children.

“Advisors need to convey to female boomer clients the importance of participating early because women are in and out of the workforce on average 12 years to take care of kids,” said Quist-Newins. “So getting more money in and as early as possible is really critical. Also, they need to ‘snatch the match’–contribute up to the employer-matching contribution.”

She added that retiring early has the same implications for participants in defined benefit plans as for Social Security beneficiaries. These include similar penalties (such as an actuarial reduction in the payout) and benefits. Many plans, for example, offer a minimum spousal benefit equaling 50% of the vested accrued death benefit.

To ensure they don’t outlive their retirement income, said Quist-Newins, boomer women should annuitize from 25% to 50% of their investment portfolio. They do well also to adopt a laddering strategy: purchase multiple annuities that annuitize at 5- to 7-year intervals and that take a progressively more aggressive investment position the longer that funds stay invested.

“Annuities can be an especially important tool for women, not only because of their greater longevity, but also because the products help them to manage risks associated with a declining portfolio when the market is down,” she said.