As I have written previously, women face different healthcare challenges in retirement than their male counterparts. Because they are more frequently in a caregiving role than men, they may spend fewer years in the work force, placing them at a disadvantage for accumulating savings and investments to cover the costs of retirement, including healthcare. And because women statistically live longer than men, they are more likely than men to have the types of healthcare needs that accompany advanced age.
Figures from the Women’s Institute for a Secure Retirement (wiserwomen.org) vividly display the double-bind that many retired women experience. In 2018, the median annual income for women age 65 and older was $20,637, compared with $36,370 for men. At the same time, 55% of women 65 or older are widowed, divorced, or never married. But at the same time, these women will typically spend twice as many years in a disabled state as men of the same age: an average of 2.8 years if they are 65 or older, and 3 years if they live past age 80.
But there are steps that women in transition can take to prepare for the extra burden that retirement healthcare costs can place on them in their later years. Especially with good advance planning, it is possible for women to successfully manage the “longevity gap” and have adequate resources to cover those extra healthcare costs in retirement.
- Start saving early. This is just common sense, but it bears repeating. A woman in her early to mid-forties can invest a little extra now and, with growth and compounding, fund the additional healthcare costs she may face in retirement, due to her longer lifespan. According to healthcare planning software provider Healthview Services, a man in his mid-forties can invest a little over $41,000 today and expect to be able to pay for the retirement healthcare he is likely to need. A woman of the same age would need to invest a bit more than $46,000. But that extra $5,000, invested today, could provide an additional $200,000 during her retirement, offsetting almost all of her likely additional healthcare expenses. How you save is up to you: boosting your contributions to an IRA or 401K is great; some people prefer to establish a health savings account (HSA) for assets allocated specifically for healthcare. But the point is, putting a little extra money aside earlier in life can eliminate worries over healthcare costs in retirement.
- Take care of yourself. More common sense, right? But good health habits now can translate into lower healthcare costs in your later years. While it is true that some of us did better in the genetic lottery than others, each of us can make healthy decisions about diet, exercise, and taking the advice of our physicians that will produce dividends in wellbeing for years to come.
- Do your homework on Medicare and Medicare supplements. Medicare is the number-one health benefit for most retirees, but the coverage structure is complicated. This is an area where a trusted advisor can be of tremendous help, since the ins and outs of Medicare coverage can create a number of confusing choices with regard to which Medicare supplement insurance plan is best for you as a woman in transition to retirement.
As a fiduciary financial advisor, I help women in transition and other clients make smart decisions for funding healthcare and other costs of retirement. If you would value greater clarity about your future resources, click here for a complimentary second opinion on your retirement plan and strategy.
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