Who Has A Bigger Financial Risk - Men or Women?

In general, women bear greater financial risk than men. Most married women bear more risk than their husbands because they tend to be younger and have a longer life expectancy. And since women tend to earn less money than men, there is greater pressure to make fewer assets cover higher costs, particularly for single women.

If you are a woman – or if someone you love is a woman – there are issues specific to women that you need to be aware of, especially when planning for your golden years.

Here are five financial issues women should prepare for when planning for retirement and end-of-life care:

1. Women need to be aware of their finances and future needs, whether married or single. People not in relationships tend to be better about this out of necessity. If you are married, it’s OK if one spouse takes the primary role in planning for your future, but it is critical that if you are a woman you understand your situation and are prepared to take control if your husband passes away. If you and your husband have a financial advisor, you need to have a personal relationship with the advisor, and not just through your husband. If you don't have an advisor, you and your husband should meet regularly to discuss your finances, so you are always apprised of your current situation and don’t have to start from scratch if your husband predeceases you.

2. If you’re married, your plans should take into account that you will probably live longer than your husband and will live alone for a number of years. On average, women in the U.S. live six years longer than men. We have had married men come in feeling great about financial plans they had made based on their expected death, without taking into account that their wives were considerably younger and could well outlive them by 20 years. This alone is enough reason to seek the advice of a qualified financial advisor. You cannot afford to make a mistake that results in your running out of money with years left to live.

3. Women need to allow for greater health care expenses. Women spend more on health care than men do. This is partly because they live longer, so they have more years of care to pay for, but they also go to the doctor more frequently, are more likely to follow the treatments prescribed, and they tend to see more specialists because of issues that are specific to women, like obstetrics and gynecology.

Other factors to be aware of include insurance premiums and inflation. Long-term care insurance premiums are higher for women; particularly for single women, since married women get a couple’s discount of approximately 30% on their premiums. Also, inflation is almost twice as high on healthcare as it is on consumer goods, so costs will increase exponentially the longer you live. Miscalculating the effect inflation will have on your health care during your final years can result in serious financial problems.

4. Think twice before giving money or other assets to your children. Make sure you know what your needs are before you start giving money away. You don’t want to divest yourself of assets you may need for your own care in the future. For more on this topic, see my article, “What We Should Consider BEFORE Giving Our Adult Children Money.”

5. Know what you will do when you can no longer live alone. Men should plan for this too, but since women live longer, they are more likely to execute their plans. If you don’t have children, you need to choose an assisted living facility or nursing home and know what it will cost before you need it. If you do have children, don’t stop at assuming one of them will take care of you; they may not have the will or the resources to take you in. Have a conversation with them to determine who will be your caretaker(s) and where you will live. This will make the transition much easier on everyone concerned when the time comes.

-Sandra Cleveland-