Women's Guide to Retirement Success

I was raised primarily by a single mother and saw her grow a very successful business while raising a son on her own. I also saw the financial challenges that my grandmother faced (very successfully, I would add) when she lost my grandfather, and my primary father figure, when she was the very young age of 62. She had barely driven a car by herself, much less having to make all of the important financial decisions on her own after almost 50 years of marriage. That’s a huge part of why working with women has always been a very high priority since the first day of becoming a financial advisor.

Women face several specific challenges that, in most cases, do not and will not impact their male counterparts. Longer life expectancy, wage discrepancy, or the expectation that as mothers, sisters, and daughters, women are often counted on to be caregivers for family members in need. Whether it’s something as small as a cold or as debilitating as a terminal illness, women are typically the ones to care for and help out when a loved one is sick. But what happens when the caregiver is in need of her own care? Unfortunately, too many women are stuck facing this dilemma head on instead of preparing for it while there are still plenty of options, resources, and time ahead. Here are a few reasons why it’s so important for women to take control of or, at a very minimum, take a significant role in planning their financial future whether you are married or not.

Women Are Outliving Men

According to the Centers For Disease Control, in 2017, the average life expectancy of men was 76.1-years-old. Women, on average, however, outlived their male counterparts by five years, with a life expectancy of 81.1 years.¹ While an extra five years may not sound like much, it opens women up to a much higher likelihood of developing chronic illnesses and disabilities that can threaten their autonomy.

Not only is the husband often no longer around to act as a caregiver during these last few years, but the couple’s collective savings may have been drained early on as well. This can happen because as a woman focuses on caring for her ill husband, his care and expenses can quickly deplete their savings. When it comes time for a woman’s own needs, the funds are no longer there.

Higher Risk of Health Problems

As mentioned before, a longer life expectancy leaves women much more vulnerable to developing chronic health problems later in life. Because of this, the majority of the population in need of long-term care services are women. In fact, 66.8 percent of nursing home residents, 59.1 percent of hospice care users and 70.² percent of residential care community members are women.2 Unfortunately, while you may not think long-term care is a part of your future, the statistics speak for themselves. More likely than not, women are going to be in need of some sort of long-term care later in life.

Affordability Is an Issue

Widows, divorcees, and women who have never been married are often at a disadvantage when it comes to being able to afford even a moderate lifestyle in retirement. Twenty percent of widowed women 65 and older were impoverished in 2012, while that number jumped to 29 percent in women who have never been married.³ Factor in a lack of planning and the higher probability of age related health issues, and those women who were trying to stay afloat in times of good health are likely to only sink further into debt.

Lack of Retirement Planning

There are several reasons why women just aren’t planning for retirement at the same rate that men are. While women make up 46.8 percent of the workforce, they’re typically spending less time working as they leave jobs to raise a family or care for loved ones.⁴ Additionally, women are typically earning only around 80 percent of what their male counterparts do, according to the U.S. Census Bureau.⁵

With less income and an often smaller focus on career, women generally aren’t putting the same amount of effort into retirement planning as men are. And without proper planning, they aren’t preparing themselves or their finances for future income needs.

Women Provide Care To Others

Whether it’s for aging parents or loved ones with disabilities, one in five Americans serves as a caregiver. Of that group, 58 percent are women.^6, And while many are happy to help, caregivers don’t always take into consideration the physical, mental or financial toll it can take. Not only can caregiving remove a woman from the workforce, but it can drain her finances as she spends her savings on the expenses of a loved one. In doing so, she may be opening herself up to a future lack of funds when it comes to her own long-term care expenses.

With women being at a higher risk for needing long-term care later in life, it’s important to spend time now preparing for unexpected expenses. Take the time to incorporate a long-term care strategy into your retirement plan to help keep yourself afloat in the face of untimely events.

What Can Women Do To Take Control of Their Financial Future?

Women in the United States generally retire around the age of 66.^7, And for some women, there can be significant planning challenges involved in preparing for retirement, whether married or single. When facing retirement head-on, preparedness is a key component of securing financial stability and independence. Here are four tips women can use to plan and prepare for a peaceful, financially sound retirement. 

Tip #1: Have a Plan

A 2020 study found that around 51 percent of unmarried women have not saved for retirement. By comparison, that number drops to 24 percent for married women.⁸ The problem is, it’s likely you’ll be spending 10, 20, 30+ years in retirement, so having substantial savings is instrumental. The Department of Labor recommends that retirees prepare to live on 70 to 90 percent of their pre-retirement income in order to maintain their usual standard of living.

If you’re living on a single income, saving for retirement may be extra challenging. Developing a plan with plenty of time to prepare can help improve your retirement savings. 

Tip #2: Prepare For Long-Term Care

Someone that is turning 65 today will have almost a 70 percent chance of needing some type of long-term care services and support in the coming years.⁹

With that being said, it may be beneficial to consider a long-term care insurance policy to help cover such costs. Even if you have family or friends who can help, long-term sickness or injury may require care beyond what your family can help with physically and financially. How will you be cared for, and who will pay for the care? Assisted living and long-term assistance can be incredibly expensive. 

Tip #3: Consider Delaying Social Security Benefits

Social Security provides benefits and financial protection for women, with almost 55 percent of the people receiving Social Security benefits being women.¹⁰  And it provides an inflation-protected benefit that will last as long as you live. When it comes to drawing from Social Security, it is advisable to delay this for as long as you can without going past the age of 70.

If you can delay until that age, your income will increase significantly each year. Even though your Social Security benefits can become accessible at 62, your full retirement benefits will only be available once an individual reaches their full retirement age, which is determined by their birth date. Any benefits that are received before reaching your full retirement age are reduced by a percentage, which is also determined by birth date. This ranges between 25 and 30 percent.¹¹

According to the Social Security Administration, the reduction in benefits is typically permanent. If you were to access your benefits at 62, the percentage removed would remain even after you have reached your full retirement age.¹² 

However, if you were to wait longer than the full retirement age to access your benefits, you can receive a retirement credit, which is a percentage based on how long you waited, up to the age of 70.¹²

Tip #4: Build a Network of Friends and Acquaintances

You may find yourself bored or lonely once you retire, so establishing friendships and acquaintances is a great way to find new activities and friendships. In fact, studies have shown that strong friendships can actually improve your health and prolong your life.¹³

Some ways to build new friends and acquaintances could include:

• Attending local events
• Starting a new hobby or interest
• Volunteering
• Joining a walking or exercising group

Retirement planning can be difficult enough as it is, but this can substantially escalate for women. With the right planning, however, you can create a stronger future for yourself. And as always, speak with a financial professional if you have any questions. 

1. https://www.cdc.gov/nchs/products/databriefs/db328.htm
2. https://www.cdc.gov/nchs/data/series/sr_03/sr03_038.pdf
3. https://www.epi.org/publication/women-over-65-are-more-likely-to-in-poverty-than-men/
4. https://www.dol.gov/wb/stats/NEWSTATS/latest/demographics.htm#three
5. https://www.census.gov/library/publications/2018/demo/p60-263.html
6. https://www.apa.org/pi/about/publications/caregivers/faq/cdc-factsheet.pdf
7. https://www.oecd.org/els/emp/average-effective-age-of-retirement.htm
8. https://www.ebri.org/docs/default-source/rcs/2020-rcs/rcs_20-fs-5_gender.pdf?sfvrsn=f6bc3d2f_6
9. https://acl.gov/ltc/basic-needs/how-much-care-will-you-need
10. https://www.ssa.gov/pubs/EN-05-10127.pdf
11. https://www.ssa.gov/benefits/retirement/planner/agereduction.html#:~:text=You%20can%20start%20receiving%20your,your%20benefit%20amount%20will%20increase
12. https://www.ssa.gov/pubs/EN-05-10147.pdf
13. https://www.health.harvard.edu/newsletter_article/the-health-benefits-of-strong-relationships