Since societies first began measuring life expectancy in the late 17th century, it’s been observed that women tend to live longer than men. This makes retirement planning for women a little different and potentially more than a little challenging.
What factors play a part in estimating average life expectancy? What are some of the bigger challenges in retirement planning for women that need to be addressed? This post takes a closer look at these hurdles and other important considerations.
What Is the Current Life Expectancy for Women and Men?
According to the Journal of the American Medical Association, the average life expectancy for women in the U.S. was 76.1 years as of 2021. That was a slight drop from 2019 (78.8 years) and 2020 (77.0 years).
Even with the decline, the gap between the life expectancies of women and men has continued to widen. It’s now 5.8 years, the largest it’s been since 1996. Researchers say the difference can be attributed to smoking being slightly more common among men than women, resulting in higher rates of lung cancer and cardiovascular disease.
A longer life expectancy means retirement planning for women covers more years than it might for men. As such, savings, investments, and other financial instruments must be recalibrated to reflect the additional years women have to live.
Unique Financial Challenges for Women
Complicating the situation is the historical financial inequality between women and men.
There’s still a sizable gender wage gap—women who work full-time jobs year-round only make 84% of what men do. A survey from GOBankingRates found that 57% of women don’t have emergency savings accounts, compared to 44% of men. Another survey found that 26% of women have less than $10,000 in retirement savings, while only 17% of men are in that same boat.
Women also run into discrepancies brought out by “traditional” gender roles that persist in the 21st century. The U.S. Department of Labor found that the “employment-related costs” for mothers providing care to their children equals about $295,000 in a single lifetime. This can reduce a mother’s lifetime earnings by an average of 15%, extending the challenge of retirement planning for women.
Living longer means more healthcare-related expenses as well. Long-term care services like nursing homes and assisted living can add up to exorbitant sums. The result is that senior women are more likely to live in poverty than men.
Retirement Planning Strategies for Women
While the life expectancy gap between women and men poses some issues, there are a few options regarding retirement planning for women that can help females navigate the financial landscape more easily.
Save Early
The earlier one starts saving for retirement, the more time they’ll have for making and growing sound investments. Whether it’s through a retirement fund or another investment vehicle, this can make a big difference in retirement.
“We often recommend that folks start saving an amount that fits with their budget. Then, as they get pay increases, their savings should also increase.” adds Mallory Kretman.
Postpone Social Security Benefits
“In my work with clients, I’ve been known to roughly sketch out the potential lifetime Social Security benefits if one begins at full retirement age vs. if one begins at age 70.” says Mallory Kretman.
If a worker can delay withdrawing Social Security funds until after age 70, they stand to receive higher monthly payouts in retirement. Needless to say, this can improve their financial stability.
Be Aggressive and Diverse in Investing
Assertiveness in one’s investment strategy can go a long way. Certain stocks and funds can experience higher growth over the long term, increasing the value of a worker’s nest egg.
Mallory Kretman shares: “Of course, it’s worth noting that with high growth potential comes high loss potential. One should carefully consider if they have the tolerance to ride through market swings. We usually find that young investors (in their 20s to 40s) have an easier time weathering market swings, as they are decades away from needing to access their savings. Investors nearing or in retirement often need more cushion from volatility, since they will need to access their savings.”
Market watchers also advise investors to allocate their assets over a diverse range of business sectors and market caps—a common strategy for mitigating risk.
Map Out Healthcare Costs
As much as possible, women workers should create a projected healthcare profile for the future and take steps to meet their anticipated needs. These can include taking out long-term care insurance and using a health savings account (HSA) with tax advantages.
Get Professional Help With Retirement Planning
Laurel Wealth Planning seeks to make retirement planning for women more manageable. The team’s fiduciary advisors give sound, objective financial advice with a holistic approach. Looking at all aspects of your financial life and connecting them in ways that add meaning and value, you are at the heart of your wealth management plan.
To schedule a complimentary consultation, email laurel.wealthplanning@laurelwealthplanning.com, call (952) 854-6250, or reach out online. Even if the LWP team is not a good fit for you, they will assist you in the next step of finding someone who is.
Mallory is a Wealth Manager and Shareholder. She listens deeply and helps simplify complex financial situations to help clients move into an easier, clearer future. She aims to give financial advice that is compassionate, wise, and easy to understand.
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Mallory is a Wealth Manager and Shareholder. She listens deeply and helps simplify complex financial situations to help clients move into an easier, clearer future. She aims to give financial advice that is compassionate, wise, and easy to understand.
