Retirement is a major financial challenge for most people, but new studies are finding that it can be especially difficult for women. According to a study from the National Institute on Retirement Security, 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 are retired women more likely to live in poverty than retired men? There’s a wide range of causes. Many instances may be based on unique personal situations and challenges. However, researchers have found general factors that may apply to many women approaching retirement.
Below are a few challenges women may face in retirement. If you recognize and understand these challenges, you may be able to implement a plan and minimize risk. It also may be helpful to consult with a financial professional to help you develop a strategy that aligns with your goals, needs and unique risks.
Women live longer than men.
There’s no doubt that today’s retirees are living longer than past generations, largely because of advances in medicine and nutrition. According to the Society of Actuaries, 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
The same study found that women are more likely than men to be a couple’s surviving spouse. 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 87 and a 25 percent chance of living to 92.2
At first glance, a long retirement and life span may seem like a good thing. However, longevity can be a challenge for retirees. The longer you live, the more years you have to fund with savings. You have to make your money last longer, and you may face costly medical challenges, especially in the later years.
You can minimize the longevity risk by accumulating more assets and by watching your spending once you enter retirement. Also, consider tools such as annuities. Many annuities offer options to generate income that’s guaranteed for life, no matter how long you live. That kind of guarantee can give you financial certainty should you live into your 80s, 90s or beyond.
Women are more likely than men to live alone.
Since women have longer life expectancies than men, it logically follows that they’re more likely to live alone in retirement than men. A recent study found that among retirees age 65 to 74, only 58 percent of women are married, compared with 75 percent of men. Starting at age 75, only 42 percent of women are married. At age 85 the share of women who are married drops to 17 percent, while the proportion of married men is at 60 percent.3
Longevity isn’t the only reason women are more likely to live alone. Researchers found that men are more likely to marry a younger woman than women are to marry a younger man. They also found that men are more likely than women to remarry after their spouse’s death.
Regardless of the specific reason, it’s important for women to recognize the possibility that they could live alone in the later years of retirement. You may want to consider long-term care insurance to pay for in-home assistance or even an assisted living facility. Also, be sure to maintain relationships with friends and family so you have a support network as you grow older.
Many women don’t have the same earnings history as their male counterparts.
It’s common in many families for one spouse to sacrifice career for the sake of raising children and managing the home. Family dynamics are rapidly changing. However, women are often the ones who take on this challenge.
While the decision not to work outside the home may ultimately be the right one for the family, there’s no doubt that it limits a person’s career earnings. That affects a number of important retirement planning factors. For example, a woman with little or no earnings history may have a lower Social Security benefit than her partner. A woman who doesn’t have a full-time career may not have a 401(k), an IRA or other retirement assets.
Develop a strategy in which you can accumulate assets separate from your spouse’s. For instance, you could contribute to your own IRA. Also, be sure to review your spouse’s retirement assets regularly, especially the beneficiary designation. Finally, consider delaying your Social Security benefit as long as possible so you can increase the amount.
Ready to develop your retirement strategy? Let’s talk about it. Contact us today at Baacke Insurance Services. We can help you analyze your needs and create a plan. Let’s connect soon and start the conversation.
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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