Women Need Strategies for Retirement

In generations past when someone retired, living to age 75 amounted to a life full of longevity. Social Security benefits were often supplemented by a pension, allowing for multiple streams of income in retirement.

But over time, as longevity increased, the government encouraged retirees to begin investing in their own retirement accounts, rather than relying on an employer to do so on their behalf.

Many retirees, including women, did not mange to set aside enough funds for retirement while in their working years, leading to them rely more heavily on Social Security as their primary form of income once retired. With costs of living skyrocketing, and the vast majority of retirees taking Social Security the year they become eligible, living on on a budget becomes essential for most women as they age.1     

Funding retirements with longevity

The Social Security Administration (SSA) estimates that today’s average 65-year-old woman will live to age 86½.2

According to the 2020 Census, 13.5% of all working-age-persons between the age of 15-64 have a pension. Only 43.5% of women own a retirement account of any kind.3

Employer-sponsored retirement plans 

For most retirement plans in the 21st century, individuals must personally contribute to their employer-sponsored retirement plans (ie-IRA, Keogh, 401(k), 403(b), 503(b), Thrift Savings Plans). The value of the plan is based off of the individuals total contributions, company matches, and investment returns.     

Pension plans

Pensions, (defined-benefit plans or cash-balance plans), are different. They guarantee a specified monthly-benefit at retirement, based on salary history and length of service, rather than total contributions and investment returns.4

Pensions funded by someone else other than the future retiree are becoming more and more rare, meaning that retirement savings are now up to each of us individually.

Given these projections of longevity, and the personal responsibility to accrue retirement assets and incomes, it appears that affording a retirement of 20 years or longer could be in your future.

Are you prepared for a 20-year retirement?

How about a 30-year or even 40-year retirement? Don’t laugh; it could happen. The Society of Actuaries predicts that an average healthy woman that reaches age 65 has a 44% chance of living past 90, and a 22% chance of living to be older than 95.5

Start with good questions.

How can you draw retirement income from what you’ve saved? How might you create other income streams to complement Social Security? What unnecessary expenses do you have that can be eliminated or reduced? And what are some ways you can build strategies to help safeguard your retirement savings and other financial assets?

Enlist a financial professional.

Enlisting the services of a qualified financial advocate with whom you have a good rapport and understanding, can help to share appropriate strategies that address your circumstances.

It is especially profound when your financial professional understands the unique challenges that women face when working to save for retirement. These may include income inequality, opportunity bias, time out of the workforce due to childcare or eldercare, providing financial support to another when they are in need. It could also mean helping you to maintain financial equilibrium in the wake of divorce or the death of a spouse.

The fifties are a fine time to develop a plan forward.

If you are in your fifties, you likely have less time in the workforce to make back any big investment losses than you once did. So, helping to protect what you already have may be a priority. At the same time, the possibility of a retirement lasting up to 30 or 40 years will require a good understanding of your expenses, liabilities, assets, risk tolerance and overall goals.

Consider extended care coverage.

Women have longer average life expectancies than men and may require significant periods of eldercare. Medicare is no substitute for extended care insurance. It only covers a few weeks of nursing home care, and that may only apply under special circumstances. Extended care coverage can help provide financial relief if the need arises.6

Claim Social Security benefits carefully.

If your career and health permit, delaying Social Security can be a wise move. If you wait until full retirement age to claim your benefits, you could receive larger Social Security payments as a result. For every year you wait to claim Social Security past your full retirement age up until age 70, your monthly payments get about 8% larger.7

Retire with a strategy.

As you face retirement, a qualified financial advocate, who understands your unique goals and circumstances, can help you design an approach that can serve you well, for years to come.

1. TransAmerica Center for Retirement Studies: 20th Annual Survey
2. SSA.gov, 2021
3. Census.gov, 2022
4. Census.gov, 2022
5. LongevityIllustrator.org, 2021. Life expectancy estimates assume average health, non-smoker, and a retirement age of 65.
6. Medicare.gov, 2021
7. SSA.gov, 2021

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