Women: Plan for Increased Retirement Costs vs. Men
by Tom Damron
We don't have to be reminded of the differences between women and men. It's all too well known. However, not enough has been written to alert women about the differences that exist when it comes to financial understanding and planning.
Historically men have saved more, spent less, and planned deeper for retirement than the vast majority of women. For years financial planners of all genres sought out men for planning and bypassed working women because most felt uncomfortable approaching women to do critical planning.
It is with much oversight that women will find that their costs during retirement years greatly differ because of their sex.
The Baby Boomer generation is entering retirement in huge numbers daily, numbers said to be approaching ten thousand per day each year. Planners are beginning to understand, identify and recognize that doing planning for these differences will uplift both couples and singles of both sexes to consider designs and execute plans that are precisely blueprinted only for their for retirement financial needs.
The majority of the differences in retirement costs are from the undeniable fact that women normally live longer lives than do men.
Actuarial tables in 2012 identified the life expectancy of a 65-year-old woman to be age 86. That relates to a two year span over the actuarial lifespan of a man age 65. If a married couple of age 65 retire in the same year, the wife is more likely to live at least two years longer and will also be required to spend more time in retirement living alone and more likely having to survive on a single income.
In the same year of 2012, only 45% of women age 65 and over were still married. However 75% of men age 65 and over were married.
Vital statistics about how retirees spend their discretionary income are seriously lacking, but contradictory spending precedents have forever been reported amongst adult men and women of all adult ages.
Available statistics document that men traditionally spend more on alcohol and digital devices. Women on the other hand happily employ their time pursuing 'mall therapy,' spending their money on clothing, shoes, household products and accessories as well as family food.
Women-led households contribute more to charitable organizations, churches, and women's club activities. it's no small matter when it is continually reported that women will save far less than men for their retirement since their salaries tend to be lower while at the same time they spend fewer years in the work place because they frequently leave work for periods of time in order to raise the children.
As a result of women having lower salaries and fewer work years it is a given that they will have less saved for retirement income than men. This dichotomy means that they will also have considerably less discretionary income to use during retirement.
Some planners have tagged this situation to be 'retiree paralysis.' Retirees in turn fear even spending money on necessities. That fear converts to the dread that they may actually live longer than expected and the dollars they spend now may later be needed for unanticipated medical or increased living expenses as a result of inflationary times.
Their earlier fear is that they know that they face higher costs for healthcare in retirement than men. Again, using 2012 as the base, the per capita 'out-of-pocket' healthcare expenses for them averaged $5,246 versus $4,125 for men, a significant $100.00 per month of additional expense.
We all know, and sometime joke, about the fact that women are more likely to see a doctor than men. The documented number of doctor visits for women ages 65 to 74 were appreciably higher than men in that same age group. Women far outpaced men in medical visits. The differences were that women made 741 visits compared to just 680 visits by men.
Because of the fact that women live longer than men, they are more likely to reach the age where they require moving to an assisted-living arrangement or often to a room in a nursing home.
If you have the need to visit a nursing home, give your attention to the ratio of women to men. In the United States, 70% of more of nursing-home residents are women. IN that respect, their average age is 80 when they first enter the nursing care.
Some 1.6 million Americans over age 65 are in or have been in a nursing home and they can expect the costs to exceed their incomes and savings. A recent Glenworth study learned that the average annual cost for a private room was $87,600, while a shared room was a lower $77,380. If dementia is one of the factors, the cost increases well beyond the ability of most retirees to afford. It averages $793,000.00 before death occurs.
Where possible, these potential costs should be factored into retirement planning through the use of long-term care insurance.
Women must be proactive and recognize the need to budget more for their retirement years. They understandably face higher healthcare costs because of the combination of their longer life span, more frequent medical visits, and are more likely to need assisted-living or nursing-home care. The mere fact of the longer retirement hazard of living alone will include more time living on less income than will men.