A new report from the Society of Actuaries (SOA) shows that while half of women will likely live beyond age 85, 92 percent do not plan far enough in the future to cover the 20 some years between retirement and life expectancy.
Actuaries say that an understanding of post-retirement risks women face is particularly important. For example, they cite that the expected average value of the cost of lifetime long-term care services is $29,000 for males and $82,000 for females. And while I admit to not knowing that, it makes perfect sense. Women tend to live longer.
The report highlights five key risks affecting women in retirement, including:
- Outliving Assets – Four out of 10 women over 65 living alone depend on Social Security for virtually all of their income. Simply put they do not have enough assets to pay for their needs.
- Loss of Spouse – If anyone would know the following it is actuaries. A widow on average lives 15 years more after a spouse has died. While not as common for future generations, for today’s widow the death of a spouse is usuallyæ accompanied by a decline in standard of living. Eighty-five percent of women over age 85 are widows, compared to 45 percent of men.
- Decline in Functional Status – Women are likely to have a longer period of chronic disability and are more likely to need care in a long-term facility or from a paid caregiver. Forty-six percent of retired women are more likely to expect to pay for assistance than retired men (34 percent), during the less active, somewhat limited stage of retirement. Additionally, 70 percent of retired women are more likely to rely on family or community services for help than retired men, during the least active stage of retirement.
- Healthcare and Medical Expenses – Health benefit costs may affect women more than men because they often have lower incomes, but not lower health care costs, and are less likely to have employer provided early retiree health benefits. Health care costs for a retired couple both at age 65 in 2010 can amount, on average, to $250,000 over their retirement years, not including the cost of long-term care.
- Inflation and the Economy – Inflation has a greater impact on women due to their longer life expectancy.
“This report underscores the need for women to understand the full-blown drama of retirement,” said Cindy Hounsell, President of the Women’s Institute for a Secure Retirement (WISER), who co-sponsored the report with the SOA. “For most women, there is little room for error and being unprepared for nearly a third of their lives will have consequences. Women need to know what their future risks are and make mitigating those risks a priority throughout their lives.”
Here’s the full report.