20 Jun 11 Risks Women Face in Retirement
We are supposed to look forward to our retirement years as a time to relax, to enjoy family, friends, travel, and maybe to volunteer. We don’t want to have to worry about living expenses and hope that our retirement plan or 401(k) will suffice so we can continue to enjoy the same standard of living that we always have.
However, women face a unique set of risks in retirement that men often do not, so women need to consider these risks and plan accordingly.
#1 – Healthcare and extended care expenses
Women usually live longer than their spouses, so they will likely spend more money on healthcare and extended care expenses. And as we age, our healthcare costs climb. After a woman’s husband dies (often from age or illness), she will likely face doctor and hospital bills incurred before his death.
And let’s face it; women are more likely to go to the doctor and acquire health-related costs, so it makes sense that they would spend more on their healthcare needs. If a woman becomes unable to live on her own, she may need extended care at a facility that will cost a pretty penny. Since the costs of these services aren’t going down anytime soon, it’s easy for women to burn through their savings to cover these expenses.
#2 – Outliving assets
Another common risk women face in retirement is outliving their assets. Women often live longer than their husbands because they’re often more health-conscious, so it’s not unusual for them to live longer than what they’ve planned for. Living longer is great, of course, but women need to make sure to have enough set aside so they can live well.
#3 – Losing a spouse’s retirement assets
Because women typically work fewer hours over their lifetimes than men do, they often depend on their spouses’ retirement assets to offset their own. For example, if a woman’s husband dies, she can expect to lose some of his Social Security and pension plan benefits. This is risky because if she loses her spouse’s benefits and doesn’t have enough of her own benefits, she will face financial challenges that she wasn’t expecting.
#4 – Inflation
Inflation is real, and there’s no escaping it. It affects everyone, and women need to not only expect it but also to plan for it. Understand that the money you save up today may not get you as far in the future.
#5 – Living on a fixed income with less to spend
Adjusting to living on a fixed income can be a real challenge for anyone. Without regular paychecks coming in from a job, it can be difficult for people to adjust their mind-sets when it comes to spending less and really watching every penny.
#6 – Retiring early
More and more men and women seem to be retiring early. Most people expect to retire around age 65, but many may retire and leave the workforce at age 62. Three years may not seem like a big deal, but it sure cuts into the amount of money that women have to fund their retirement. If women would continue to work and retire just a few years later, the likelihood of their outliving their assets would decrease as well.
#7 – Women retire because their spouse is retiring
Women desire to retire (often early) simply because their spouses are retiring. However, just because their husbands are retiring doesn’t mean it’s the best time for them to retire (see #6). This means that women will begin tapping into their assets earlier than planned, yet these assets are supposed to last their lifetimes. This contributes to the problem of women outliving their assets because they accessed them before they should have.
#8 – Women are primary caregivers
Usually, women are the primary caregivers of children, spouses, aging parents, and other family members. Since much of their time is spent caring for others without compensation, they often earn less over their lifetimes. In fact, on average, middle-aged women work less than men, which can reduce their lifetime wages and benefits. This has a huge impact on how much social security is available to women and how much their 401(k) plan or IRA end up being.
#9 – Wage gap
Although the wage gap between men and women is improving, it still exists. The wage gap is often an overlooked risk for women in retirement. This means that women earn less over their lifetimes than men do, and they are forced to figure out how to make less retirement money last longer.
#10 – Divorce
Since the divorce rate is so high, many women find themselves on their own when it comes to retirement. This is why it’s so important for women—married, divorced, widowed, or single—to take responsibility for their own retirements and not necessarily plan on their husbands’ benefits being available to them. Yes, women can sometimes receive some of their ex-husbands’ retirement benefits, but there are requirements that must be met for that to happen. Click here for more details about this specific issue.
#11 – Men are often financial managers
Although this is not true in every case, husbands are often the couple’s financial manager, and wives are not overly aware of their financial picture. This is risky because when a woman’s husband dies, she may not have a clue about what kinds of accounts they have or decisions that need to be made. It’s best for a couple to work together so that both have an understanding of what’s been put in place.
Women Need to Plan Differently
Obviously, women need to step up and embrace retirement planning so that they can enjoy their retirement years and have plenty to live on for the lifestyle they envision. Because women live longer than men, they shouldn’t plan their retirements in the same way as men. It just doesn’t make sense.
If you feel like you’re in the dark with your retirement planning, don’t leave it to chance. Contact a competent and caring financial planner like the ones at www.russellandcompany.com, and let them help you make sense of it all. They will be able to determine your unique needs and help you plan accordingly.
This newsletter was prepared by a third party company to be used on the Russell & Company and Simple Money Tips for Women websites.
