Why Women Need to Save More for Retirement Than Men

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Why Women Need More Money in Retirement Than Men - Rick Martin



FACT: The number of wealthy women in the United States is rising twice as fast as the number of wealthy men. Experts estimate that by 2030, women will control as much as two-thirds of the nation’s wealth.1

That is good news for women – in the future! For now, it appears that the accumulation of wealth by women in the past lags their male counterparts for several reasons, as I describe in this article. I work with a lot of single women, whether they are unmarried, divorced, or widowed.

I believe it is critical for women to consider their own financial future, even if they are currently married or in a relationship. Because, as you read this article, there is a strong likelihood that many women will become single again before they die. Here’s why women need more money than men in retirement, and why they may want to think about how they are going to cover the potential cost of long-term care toward the end of their lives.


FACT: In 2015, women earned just 80% of what men were paid.1

Women have been long fighting this injustice. Women work hard for their money and the pay gap is shrinking, but for now, it has made it more difficult for women to save as much as men have for retirement. They have to work more hours than their male counterpart just to earn
the same income.

Couple that with the fact that many women take time at some point in their lives to be a caregiver, whether it’s a young child, parent, sibling or even a close friend, it all makes it more challenging to save the funds that they may need later in their life.

Of the 63 million wage-earning and salaried women age 21 to 64 working in the United States, they have 50% less in their retirement savings accounts than men.1 This is in spite of the fact that women tend to be better at saving money than men.


FACT: In 2014, the average annual Social Security income received by women 65 years and older was $13,150, compared to $17,106 for men.2

Social Security is gender-neutral – individuals with identical earnings histories are treated the same in terms of benefits. And the Social Security system is friendlier to lower-wage earners as they do receive a higher percentage benefit than higher-wage earners do. However, a woman making only 80% of what her male counterpart earns is, they are paying that much less into the Social Security system. Bottom line: when most women get to retirement, they have lower Social Security benefits than men.


FACT: Women outlive their male counterparts by an average of 2.6 years, according to the U.S. Department of Health and Human Services.3

We have established that, in most cases, women have made less in their working years than men leading up to retirement. Combine that with the fact that women live longer, and that they have higher rates of disability and chronic health problems, many women will need some form of long-term care at the end of their life. Women also tend to need that care more than men.

The AARP Institute reports that more than 70% of skilled nursing facility residents are women and that their average age at admission was 80.3 Among people age 75 or older, women are 60% more likely than men to need help with one or more activities of daily living (referred to as ADLs), which is a qualification for some form of long-term care.5 Another reason that there are more women than men is that, in many cases, women were the caregivers for their husbands or other family members in her home.

When the time comes that the caregiver needs assistance, the person to whom she was caring for may have passed away or be physically unable to help. According to the Assisted Living Foundation of America, assisted living communities have a 7:1 ratio of women to men and, at skilled nursing facilities, the ratio is closer to 10:1.4 They attribute the absence of males in long-term facilities to a combination of genetic and lifestyle factors (particularly men’s propensity to risk-taking behavior and aggression). Under the assumption that a woman will end up in a skilled nursing facility at some point in her life, the costs for such care can be staggering.

Statistically, women who reached the age of 65 in 2012 were expected to live, on average, an additional 20.5 years and widows accounted for 34% of all older women in 2015.1 In terms of the impact on her financial status, let’s assume that a woman spends 2.5 years in a skilled nursing facility at the end of her life. That could cost her upwards of $215,000. A lot of single women don’t have that amount of resources left at age 80.


How does that affect your planning process?


Everyone’s situation is unique, so we gather all of the facts, discuss long-term goals, review potential threats to the plan, which includes long-term care, and put a plan together. It is critical to at least discuss how to handle the potential threats to avoid surprises. Plan for the worst, hope for the best! In many cases, I begin working with the primary breadwinner. Typically, that has been the man, but over the last several years, I have seen an increase in the number of women that are in that position.

When I work with couples, I encourage both of them to be involved in the process and to discuss the various options, so that when one of those events takes place, it isn’t the first time we have discussed it, we’ve actually planned for it.

Planning is a critical part of the retirement process. You wouldn’t build a house or even take a vacation without a plan of some sort. Retirement shouldn’t be any different.

In fact, when you realize that you are going to manage the family business (i.e. retirement assets) over the next 20-30 years to support your desired lifestyle, it’s somewhat irresponsible to just let it happen.

Women should be an active participant in the planning process. Whether they are single or in a relationship, working with a financial planner ought to be a collaborative process. With all parties being active in the discussion, I think it’s important for women to discuss what would happen if they became single again, whether it’s through death or divorce.

It happens and when it does, it’s an emotional event. Think how much better it can be handled if you have already discussed the impact of such an event. It doesn’t take the pain away, but it makes it easier to objectively address the next steps. Just like in any relationship, business or pleasure, communication is critical and being on the same page increases the probability of success.

Whether you want to review your current plan and get a second opinion or build your plan, we are here to help you work on a better retirement. Give us a call.




1 Matt Sommer, For women, retirement can be a serious challenge, https://www.cnbc.com/2017/01/19/for-women-retirement-can-be-a-serious-challenge.html

2 “Social Security Is Important to Women,” Social Security, https://www.cnbc.com/2017/01/19/for-women-retirement-can-be-a-serious-challenge.html (September 2016)

3 “Health, United States, 2016,” U.S. Department of Health and Human Services, https://www.cdc.gov/nchs/data/hus/hus16.pdf#015

4 Jeff Anderson, A Place for Dad: Does Gender Matter in Senior Care?, https://www.aplaceformom.com/blog/dads-gender-and-senior-care/ (June 13 2017)

5 Ari Houser, Women & Long-Term Care, https://assets.aarp.org/rgcenter/il/fs77r_ltc.pdf (April 2007)

6 “Compare Long Term Care Costs Across the United States.” GenWorth, https://www.genworth.com/about-us/industry-expertise/cost-of-care.html (August 14 2017)