Why Women Need to Plan for Long Term Senior Care
Women live longer, and that means women will have more years of retirement to pay for—in many cases, living on their own or in long-term care. So why are women less likely to have a financial plan, and what can we do about it?
Planning for a Long, Long, Long Life
Planning for retirement isn’t an easy task—and it’s even more challenging for women. We have an ever-increasing life expectancy, so we’re more likely to live long enough to need assisted living or other senior care. We’re also more likely to be the caregivers for others, or to live solo due to widowhood. Yet studies show that women are less likely to plan effectively for this long, long life. Getting educated about retirement planning and learning how to make the right financial investments is a critical step to maximizing your nest egg for the future.
Women in particular need to plan ahead more than they are if they want to be able to live comfortably and afford their own care needs in retirement. But why is this a case that particularly affects women? The 2011 MetLife Study of Women, Retirement and the Extra-Long Life cites a few primary trends:
- Women Live Longer. If you’re age 60 today in the U.S., and you’re female, says the report, you can expect to live to about 84—but if you’re male, it’s 81. Having more years to live translates directly into more retirement costs.
- Women Are More Likely to Age Solo. Women are more likely to live alone in their older age, whether due to divorce, widowhood, or other reasons, and that often means bearing the financial burden of retirement solo, too.
- Women Are More Likely to Have Higher Health Care Costs. The MetLife study mentions a variety of reasons for this, including higher longevity, less accessibility to insurance, and more out-of-pocket expenses. Also, though, women are more likely to either need long-term care themselves, or be the providers of long-term care. Being a caregiver comes with its own set of costs, too. Often, caregivers must forfeit working hours to provide care, and so earn less income.
Men vs. Women: How We Approach Finances Differently
Women have historically approached finances differently than men do, and that’s another reason why we can get behind in our retirement planning. Here are a few specific examples of how women’s financial situation significantly differs from men’s:
- Women Are Less Likely to Have a Retirement Plan: Although more women are participating in the workforce than ever before, they are less likely to have a retirement plan—either because they choose not to even if they qualify, or they work part-time and don’t qualify. Women are also likely to work fewer years if they take time off for child rearing or caregiving. What this all adds up to is lower lifetime savings, according to the U.S. Department of Labor.
- Women Earn Less Than Men: Not only are women more likely to work part-time, in 2010 they only earned 81% of what men earned, states the MetLife report. That, of course, has nothing to do with our own financial behavior, but it translates into less savings, and less contribution to pensions and Social Security.
- Women Invest More Conservatively: Women are more likely to have a penny-pinching attitude when it comes to savings, but although we’re confident about our ability to stretch a dollar, we tend to be less confident when it comes to investing our money for the future. According to a Time magazine article, this may be because we feel we don’t know enough about it, or feel intimidated by the male-dominated financial world; in some cases, women were raised to consider investment to be the man’s domain.
What Should Women Be Doing ?
In past eras, women tended to leave all the financial planning to the men, and in fact, many women even today grew up surrounded by the attitude—conscious or not—that husbands take charge of the long-term finances. But obviously this is an attitude we can’t afford. It may seem daunting, but women can start with a few simple strategies for saving:
- Learn about your own and your spouse’s retirement benefits. If your employer offers a retirement plan, join it and start saving now, and find out how long you need to contribute before you’re vested. If your spouse has Veteran’s benefits, Social Security benefits or a pension, make sure you know what the rules are when it comes to spousal rights in cases of divorce or death, notes the Department of Labor.
- Understand and review your finances regularly, and set a budget. In a Forbes article, CPA Laura McNutt suggests, “Once a year conduct a retirement analysis. Look at what you own, your spending needs and determine if what you have is going to accomplish those needs.” Be detailed about what your goals are and what you need to save to attain them.
- Get educated and build your financial confidence. Research any financial planning matters you don’t understand, consult a variety of resources, and don’t be afraid to talk to a financial planner or investment expert. “Be careful not to conclude too quickly that you have ‘all the information you need,’” says the MetLife report. Learn about savings plans, insurance, senior care costs.
- Come up with a contingency plan. Don’t wait for emergencies to actually happen before you figure out how to deal with them financially, warns MetLife. Consider what contingencies are likely for your situation, whether it’s a health emergency or long-term care, and figure out how you plan to round up the necessary resources.
- Don’t delay. There’s no better time to start than now!
What steps have you taken to make sure you and your loved ones are financially secure in retirement? Let us know in the comments.
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