Why Women Face More Challenges in Retirement

When people envision retirement they often think about traveling, spending time with family, and enjoying their hobbies. They also need to consider the cost of their desired retirement lifestyle. Unfortunately, women are more likely to face retirement planning challenges than men.

Two of the more significant challenges that women face are longevity and the cost of healthcare. According to a UBS article ‘ If you’re a woman, you’re going to live, on average almost five years longer than a man’1. Those extra five years can make a big difference in retirement expenses.  Women may also be more likely to live alone at some point during retirement than men. This means that at some point many women may have to manage their spending and their investments without the help of a spouse or significant other.

Additionally, healthcare costs during retirement can be more expensive for women because they are living longer than men 2 -this all adds up very quickly! UBS notes that women are continuing to lag behind men in achieving financial security stating that ‘ the gender wage gap persists. In 2015, the gap actually widened, with weekly median earnings rising more substantially for men than for women.’ 3 Underlying reasons include lower income, longer life expectancy and time out of the work force to be a family caregiver.’ 4

 Luckily there are planning techniques available to help offset these substantial retirement costs. Make sure you are contributing at least enough to your employer’s retirement plan to get the company match. Additionally, you may be eligible to contribute to an IRA, a Roth IRA, or a SEP IRA and the tax advantages from these types of accounts can be meaningful.6

Another option that can help offset increased health care expenses in retirement is a Health Savings Account (HSA). These accounts are used to pay qualified medical expenses. One of the primary benefits of an HSA is that the money can grow tax free, and if it is used for qualified medical expenses the withdrawals can also be tax free. This can be very helpful during retirement when health care expenses can accumulate rapidly. Some HSAs are portable and therefore may be maintained after separating from your employer.

Long term care coverage is another tool worth considering. This type of health insurance can be a worthwhile compliment to your primary health care plan. Educate yourself or consult with an advisor on the various options that are available, the cost, and the anticipated impact on your comprehensive retirement plan.

In our experience, the best way for women to prepare for retirement is to have a written and formalized financial plan. Start planning at least 10-15 years before you want to retire so you can make adjustments as necessary. Your financial plan should be reviewed and updated annually to make sure you are on track to meet your goals.

1,2,3,4 UBS What women should know as they prepare for retirement

5 UBS Financial Services, Account Types, Traditional IRA


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