Women Face Many Challenges in Retirement and Planning Ahead is Key to Achieve Financial Security
As healthcare costs continue to skyrocket, it’s becoming more and more important for American workers to develop a plan for addressing the costs of long-term care within their overall retirement plans. Failing to do so can pose a significant risk to your financial security, and it’s particularly critical for women, who already face extra challenges when it comes to living comfortably in retirement.
Below we’ll discuss five specific reasons that women should consider the costs of long-term care when planning for retirement.
#1. Women Find Themselves at a Statistical Disadvantage
Despite the substantial progress we’ve made as a nation towards gender equality, women still find themselves at a consistent financial disadvantage compared to their male counterparts. Currently, white women earn 17% less than men on average, with the gap being even larger for women of color. What’s more is that women are more likely to leave the workplace or put their careers on the back burner to care for children or elders, causing them to lose career momentum or to miss out on gaining the crucial experience needed to stay competitive. Additionally, due to a lifetime of socialization and ingrained biases, women are more likely to shy away from salary negotiations with superiors and be overlooked for leadership promotions.
Taken together, these challenges create a unique financial situation for women that puts them at a serious disadvantage when it comes to saving enough for a financially secure retirement. Not only that, but it also means that women have less working capital to put towards necessary things like long-term care expenses.
#2. Women Have Longer Lifespans
According to the latest CDC figures, the average American man will live to age 75, while the average woman in America will live to age 80. There are plenty of theories about why women are more likely to outlive men, some having to do with biology and others with behavior. Whatever the reasons, a longer lifespan for women means a longer retirement and a greater chance of needing long-term care. In fact, women comprise 75% of nursing home residents. So, for women who are planning for life after retirement, incorporating a plan to cover the expenses of long-term care is imperative.
Related Article: 10 Steps to a Happy and Healthy Retirement
#3. Women are Disproportionately Impacted by Disabilities and Chronic Health Problems
Another consequence of living longer is that women have a longer window to experience poor health and disability. A recent study done for the Journal of Women’s Health showed that women report more health concerns in terms of functional limitations and disability than men. It also showed that women report more cases of chronic health problems such as arthritis, hypertension, and poor vision.
Collectively, these statistics indicate that, even though women are living longer lives than men, they’re not necessarily enjoying more active, healthy years. This highlights why it’s so crucial that women have a plan in place for long-term care in their later years.
#4. Women Often Live Alone in Their Later Years
Because women tend to live longer than men, they’re more likely to find themselves living alone in their older age. In fact, recent research from Harvard University showed that we can expect the number of people in their 80s and 90s living alone to increase dramatically. In the same report, it was stated that women comprise 74% of solo households aged 80 and over, with that percentage continuing to grow in the next two decades. This means that women are often in need of long-term care that they must pay for rather than being able to depend on their partner or other live-in family members for care.
#5. Women Are More Likely to Be Caregivers
In America today, there are roughly 48 million unpaid or informal caregivers of adults and women account for approximately 75% of that demographic. While this may not seem to be related to a woman’s need for long-term care, studies show that women who become caregivers are 2.5 times more likely to end up in poverty and five times more likely to depend on Social Security in retirement.
One major reason for this is that women are often forced to take a job with greater flexibility or are forced to leave the workforce completely to take care of their children or elderly family members. Many times, these limitations lead to a troubling impact on earning ability. Such workforce interruptions, compounded by a lifelong pay gap, leave women likely to have earned a cumulative $1,055,000 less than their male counterparts by retirement. Ironically, becoming a caregiver means a woman is less likely to be able to care for herself in her later years.
What Can Women Do to Properly Plan for Long-Term Care?
In the face of these very real challenges, long-term care planning is an integral piece of a woman’s retirement plan. There are various ways you can go about planning for long-term care. Perhaps you want to set up a designated long-term care investment account that will solely be used for future long-term care expenses. Or you may simply want to cut back on current expenses to further increase your retirement savings so that you’ll have more resources to depend on later. Another option could be to purchase long-term care insurance that will cover expenses as needed.
If you think you would benefit from a conversation with one of our advisors about creating a long-term care plan that works with your retirement plans, contact Alphastar Wealth by emailing emeraldcoast@alphastarwealth.com, or to schedule a complimentary discovery call, use this link to find a convenient time.
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