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The Biggest Retirement Challenge for Women

By Angela Sloan

The Biggest Retirement Challenge for WomenSaving enough for a secure retirement is a tough proposition for anyone, regardless of age or income. But if you happen to be born with a pair of X chromosomes, it can be that much harder. On average, women live longer and generally have less money than men to fund their retirement years.

Indeed, women face a unique set of challenges when it comes to meeting their financial goals, including longer life expectancy, fewer years in the workforce, and persistently smaller paychecks than men. Plus, marital status and occupation aside, they are simply at greater risk of outliving their assets.

According to the U.S. Census Bureau, the poverty rate for women age 65 and older is 16 percent, compared with 9 percent for men of the same age group. Women have a bigger challenge because they need more money than men, but the data shows they actually have less. The growing prevalence of single women and divorcees puts added strain on disposable income and the ability to save. Some 37 percent of American women 65 and older live alone, compared with 19 percent of men the same age. And almost half (47%) of women 75 and older live alone.

While the statistics may not be in their favor, women are certainly not financially doomed. They just need to adjust their long-term savings plan and embrace opportunities to bridge the gap.

For women, planning for a secure retirement generally begins with creating a safety net for future medical expenses. Because women tend to live longer than men, an average of nearly five years longer, women need to budget for higher health-care costs in their twilight years. These include co-pays, deductibles, medication and, most important, assisted-living services which are not covered by most insurance plans. Health-care costs are among the biggest expenses for retirees. A 65-year-old couple retiring today with traditional Medicare insurance coverage will need a projected $220,000 to cover out-of-pocket medical expenses throughout retirement, and that does not include costs associated with nursing-home care. Long-term care insurance, which covers assisted-living, nursing-home and at-home care, is especially important for a widow, divorcee or childless female since there are fewer people around to care for them. The good news, there are now a number of alternative options available to help cover these costs.

Income is another factor that contributes to retirement challenges for women. Statistically, women are the primary caregivers in the home. They are far more likely to put their careers on hold when their kids are young, and they are more likely to retire early to care for aging parents. The Women’s Institute for a Secure Retirement reports that women typically work 12 fewer years than men over their lifetime, which means they contribute less to Social Security, resulting in smaller benefits. When they do return to work, women are also more likely to accept part-time jobs that provide for better work-life balance but rarely offer employer-sponsored retirement plans or matching-contribution benefits. And while the income gap is steadily shrinking, women today continue to earn less than their male counterparts when they are employed. All of this translates into fewer opportunities to fund their nest eggs.

When it comes to Social Security, married couples often assume that the husband should do what’s best for him and the wife should do what’s best for her, but really the goal is to try and maximize total earnings for both. Unless the husband is really ill and can’t afford to wait, he should probably delay benefits to help himself and most importantly his wife later on. When a spouse dies, part of the family income will be gone. It is important to maximize Social Security so the surviving spouse, generally the wife, is left with the largest possible Social Security paycheck.

Because women generally live longer than men and need more money to fund their retirement, they need to be particularly focused on mitigating longevity risk by ensuring their income streams are sufficient to cover living expenses. That includes Social Security, pensions, annuity income, and portfolio withdrawals. If your expenses are greater than your income and you’ve not yet quit your job, you should consider postponing your retirement, spend less and sock more money away. If you’re already retired your choices are a bit harder. You’ll need to either lower your standard of living, downsize to reduce fixed expenses or take in a roommate to ensure that your savings last. The one thing we all control is our spending. We need to realize that what we do today could lead to reduced spending and downsizing later in life.

Women do face significant challenges when it comes to planning for a comfortable retirement. However, understanding the obstacles and the opportunities can make all the difference in how comfortable one is during their retirement years.

Women often leave their finances on the back burner. They take on many different roles in their lives and they forget to think about themselves and their own future. We encourage women to educate themselves on the topic and participate in workshops and seminars to gain a better understanding about their options. At Sloan Financial we hold workshops monthly and we welcome everyone. For information about upcoming events or to be added to our mailing list, visit our website at www.sloanfinancial.net or call us at 803-222-2892.

There are many options when planning for retirement, but the key to success begins with simply having a plan.

Sloan Financial Group, LLC is a full service financial organization with expertise in financial planning, personal and business income tax preparation and planning, and insurance. Call or visit us and see how Sloan Financial can help you reach your financial goals.

Sloan Financial Group

1474 Hwy 55 East
Suite 500
Clover, SC 29710

5960 Fairview Rd.
(By Appointment)
Charlotte, NC 28210

803.222.2892 | 800.298.2892
www.SloanFinancial.net

Securities and Advisory Services offered through Madison Avenue Securities LLC (MAS), a registered Investment Advisor, member FINRA and SIPC. MAS and Sloan Financial are not affiliated companies.

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