Retirement is a difficult financial challenge for most people, but it can be uniquely difficult for women. In fact, the National Institute on Retirement Security recently found that women age 65 or older are 80 percent more likely to live in poverty than men. Women age 75 to 79 are three times more likely.1
Why is retirement more difficult for women? There are a number of reasons, and many may vary based on each person’s unique situation. If you’re approaching retirement, now may be the time to identify the risks you could face. By planning ahead, you can implement a risk management strategy.
Below are three challenges that many women face in retirement, along with possible strategies to minimize risk. A financial professional can help you further develop your plan so you can enjoy a long and financially stable retirement.
Long life expectancies.
There’s no doubt that all retirees are living longer. Advances in medicine and nutrition have made it possible for many retirees to live well into their 80s or even 90s. The Society of Actuaries estimates that the average 65-year-old couple has a 50 percent chance that one person will live to age 94 and a 25 percent chance that one will live to 98.2
According to the same study, though, the surviving spouse is likely to be the woman. Women have a 50 percent chance of living to age 90 and a 25 percent chance of living to 96. Men, on the other hand, have 50 percent odds of living to age 87 and a 25 percent chance of living to 92.2
A long life expectancy is usually a good thing, but it can create challenges in retirement. You have to make your money last longer, and you’ll have to fund more years of spending with your retirement assets.
You can manage this risk by saving more money and being thoughtful about your spending once you enter retirement. You also may want to consider tools that generate guaranteed lifetime income, such as annuities. A stream of guaranteed* income can provide you with financial certainty no matter how long you live.
Flying solo in the later years.
Since women are likely to live longer than their male counterparts, it’s also likely that many women will live alone in the later years of retirement. Research from a recent study shows that among those age 65 to 74, only 58 percent of women are married, compared with 75 percent of men. At age 75 the proportion of women who are married drops to 42 percent. At age 85 more than 60 percent of men are married, compared with 17 percent of women.3
There are a few reasons for the marriage gap among retirees. Life expectancy is a big factor. There’s also the fact that many men marry younger women. Researchers also found that men are more likely than women to remarry after the death of a spouse.
No matter the specific cause, it’s important for women to recognize the possibility that they could live alone in the later years of retirement. By recognizing this risk, you can take action. You may want to consider long-term care insurance, so you can hire in-home assistance or move into a facility should you need help.
Also, be sure to talk to your family about your needs and goals, and work to maintain a strong social network. Friends and family could be your most powerful resource should you face retirement alone.
Partial or no earnings history.
In many families, one person sacrifices career to focus on the children or home upkeep. While family dynamics and gender roles are changing, it’s still often the wife who sacrifices career for family.
Working from home may be the right choice for your family, but it can cause challenges in retirement. If you don’t work outside the home, or you work part time, you may not have access to retirement benefits such as a 401(k) plan or a pension. You will also have reduced Social Security benefits, since that program is based on earnings history.
Develop a plan in which you can accumulate your own retirement assets, separate from your spouse’s. Also, make sure you understand your spouse’s retirement accounts so you can access them in the event of his death. Finally, consider delaying your Social Security benefits as long as possible. The longer you wait to file, the higher the payment will be.
Ready to develop your retirement strategy? Let’s talk about it. Contact us today at Safe Retirement Strategies. We can help you analyze your needs and create a plan. Let’s connect soon and start the conversation.
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
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