4 Key Money Challenges for Women

If you’re a woman, or your partner is female, this edition of the Weekly Update is dedicated to you.  

That’s because the financial and retirement challenges of women are different than they are for men.

I begin with this because of two recent experiences.

First, I just became aware of another man who suddenly passed away having never really spoken to his wife about their finances.

Second, a woman (someone one of our female advisors met at a Social Security retirement planning workshop) recently told us that, because she’s single and it’s “just her,” she’d never really thought she needed to create a comprehensive plan for retirement.

But the fact is that women should plan for retirements that are unique from those of men.

And, just as importantly, the partners of women have to understand that they need to plan, and prepare their partners, for the day they won’t be around.

With that in mind, here are 4 reasons I urge women (and their partners) to take retirement planning, and the sharing of that information, very seriously.

1) Women live 5 years longer than men.1

Back in 1930, the average life expectancies for newborn males and females was 58 and 62, respectively.

But today, advances in science, healthcare, and education are extending lifespans.

And now, on average, men and women can each expect to live almost 20 years longer than those people born in 1930.2

That’s exciting!

But despite the longer lifespans, one thing hasn’t changed: Women are still outliving men.

In fact, inside of marriages, the lifespan discrepancy is even larger than it is for the general population.

Incredibly, wives outlive husbands by, on average, 11 years.2

Longer lifespans both inside and outside of marriages means that more money needs to be saved, and more detailed plans put in place, to pay for, among other things, the basic healthcare and the extended long-term care needs of women.  

2) Women are 80% more likely to be impoverished past age 65 than men.3

This underlines the entire motivation for this article.

For any number of reasons, such as taking time off to have children, or breaking from work to care for a loved one, women are more likely to leave the workforce (either permanently, or temporarily) than men.

Couple that with the fact that women often either work in lower paying jobs, get paid less because taking a break from work left them vulnerable to being passed over for promotions, or because they receive lower pay over the course of their careers, and this all adds up to less lifetime income, and, by extension, less money saved.

Note:

  • 80% of women over the age of 80 are likely to live alone.
  • Retired women are 80% more likely than men to live below the poverty line.3

3) Gray divorce has doubled since 1990.4

I’m seeing this play out more and more: a couple stays together just long enough to get the kids out of the house, then, before they embark on retirement, decide the time has come to go their separate ways.

Getting divorced later in life is not only expensive, in almost 20% of Baby Boomer households, the woman has relinquished complete control of the finances to the man.5

Don’t. 

Be sure to have a solid understanding of your personal net worth (assets minus debts), as well as household and individual expenses.

For women in marriages and partnerships, I’m going to have to insist that you insist.

This knowledge will help you take control of your financial life, and protect yourself, if the situation warrants.

4) Women 65 and older receive an average of $4,000 less in Social Security per year than men.6

You never want to be entirely beholden to a government program that was designed to only replace 40% of your pre-retirement income.

Nonetheless, Social Security is still a valuable part of the retirement planning process. (Our ongoing Social Security workshops bear that out.)

But women, in many cases, are at a disadvantage.

Keep in mind:

  • Your Social Security benefit is based on your highest 35 years of earnings.
  • The earlier you claim your benefit, the less you’ll receive.
  • Your retirement budget needs to be able to withstand the loss of income if your spouse dies (you’ll no longer receive his full benefit).
  • If you receive an ex-spouse’s benefit, you’ll lose it if you get remarried.

I strongly encourage everyone, especially women, to take the time to understand how Social Security works. This knowledge will benefit you during what could be a long retirement.

Conclusion

Planning for retirement is important for everyone.

However, for women, it’s unique (and too often ignored) since they face numerous additional challenges both on the path to retirement and during retirement.

First, share the financial information (and burdens) with your partner. Second, ask your advisor how you, as a woman, or partner, can prepare for an additional 10 years of paying for retirement.


1https://www.advisorperspectives.com/articles/2018/07/30/the-unique-retirement-issues-facing-women
2https://www.marketwatch.com/story/why-planning-for-retirement-is-harder-for-women-2018-11-02
3https://www.cnbc.com/2016/03/18/women-more-likely-than-men-to-retire-poor.html
4https://www.marketwatch.com/story/your-failing-marriage-is-about-to-make-the-retirement-crisis-worse-2017-03-13
5https://www.forbes.com/sites/nextavenue/2018/07/15/the-6-nasty-financial-surprises-for-divorcing-women/#27bbdbe6524b
6https://www.ssa.gov/news/press/factsheets/ss-customer/women-ret.pdf