Women Live Longer Than Men: Here's How They Can Avoid Running Out of Money in Retirement
Think about these tips when planning for those few extra years even while navigating through the uncertain times we're experiencing right now.
![](https://cdn.mos.cms.futurecdn.net/rje5N65nkdgLUyJdQVbdtA-415-80.jpg)
The dramatic market losses stemming from COVID-19 have many investors thinking about the safety and security of their nest eggs. For women, in particular — who are more likely to live longer and often have less money set aside for retirement than men — the financial hit may feel especially stressful.
Adding to the anxiety is the fact that no one knows exactly how long or severe the downturn related to COVID-19 will end up being. Without a crystal ball, it can be easy to assume the worst. But, even in unsettling situations like we’re in now, it’s important to focus on the things you can control and keep a long-term view of your finances.
For women who are still years away from retirement, this means doing what you can to save for the future and working to ensure you have enough money to last through your lifetime. In that spirit, here are actions I encourage every woman to take to the best of her ability. Remember, even if you can’t save and invest at the rate you’d like to during this tumultuous time, even small sums add up over time. Your future self will thank you for the progress you made, despite the challenges in your way.
![https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-200-80.png](https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-320-80.png)
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Save more
The No. 1 thing you can do to secure your financial safety is to save more money. A standard rule of thumb is that you’ll end up needing about 60% to 70% of the amount you currently spend during the years you are in retirement. This figure could be higher if the cost of health care continues to rise as it has in recent years. While you should discuss with your adviser what makes sense for your lifestyle, you may want to plan to spend closer to 80% of pre-retirement expenses to hedge against this concern. As an example, if it costs you $60,000 per year to cover all your bills now, you’ll need to budget for up to $48,000 per year in costs in retirement.
Though the current uncertainty in the market may make it hard to save, don’t despair if you’re only able to put a little away – even small amounts of money can help build a cash cushion. So if you’re fortunate that your income hasn’t been disrupted by the global pandemic, stick to your savings discipline. Further, if you receive any windfalls, such as a tax refund or are eligible to receive a stimulus check under the CARES Act, consider using some of that money for savings if you don’t need it for any current expenses.
Invest to build wealth
Consistently saving is important, but simply saving isn’t enough. If you keep a large percentage of your savings in cash rather than investing in stocks and bonds, your money may be eroded over a 30-year (or longer) time horizon. Inflation will rise over those 30 years, decreasing the buying power of your cash holdings.
Investing for the long term can offer important growth potential, but — as the recent events have brought to mind with stinging clarity — markets move up and down. To that end, it’s important to diversify your investments to protect your portfolio from volatile market conditions like what we’ve been experiencing over the past few weeks. Diversification can help offset some investment losses with gains in other investments. Work with a financial adviser to build a portfolio that contains a mix of stocks, bonds, short-term cash investments, savings and other investing vehicles, taking into account your goals and comfort level with risk.
And, remember that while it’s natural to wince when your portfolio takes a hit, a down market like the one we’re in currently can actually represent opportunities to buy stocks, bonds and other investments at a discount. Additionally, the environment may offer opportunities to lock in a lower interest rate on your mortgage if you decide to refinance. Talk with your financial adviser about whether either option makes sense for your personal financial situation.
Plan long-term care solutions
With women living longer than men, it’s important for us to take steps to protect our long-term well-being. The costs for regular medical care and potential extended or long-term care can be staggering.
What’s more, Medicare generally does not cover long-term care expenses. To that end, if you have access to a health savings account, take full advantage of it. You can save up to $7,100 a year for couples, tax-free. These accounts also grow tax-free, and withdrawals are tax-free if they pay for qualified medical expenses.
For later-life care, some people will want to consider a long-term care insurance policy or a hybrid policy that combines life insurance and longer-term care coverage. Make sure to read the fine print, though. Understand how long the policy will last once you need care, and which types of care are covered — home care, assisted living and/or nursing home care. Terms will vary from one to three years, five years or even an indefinite number of years. The cost of the policy will vary based on the type and length of coverage. While these policies aren’t for everyone, they can provide an important source of funds to provide care, in case you experience a shortfall when you need it most.
Though there are unprecedented factors that could impact women’s retirements, planning ahead can help build a sufficient nest egg. Take control of your retirement planning now to help you meet your future needs with confidence.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Marcy Keckler is the Senior Vice President, Financial Advice Strategy and Marketing at Ameriprise Financial. She leads the overall strategy for financial advice at the firm, including the Ameriprise Client Experience and Confident Retirement programs. Marcy has been with Ameriprise Financial (formerly American Express Financial Advisors) for more than 25 years in a variety of positions in financial planning, marketing and interactive development.
-
Visa Is the Worst Dow Stock Wednesday. Here's Why
Visa stock is down sharply Wednesday after the credit card company came up short of revenue expectations for its fiscal Q3.
By Joey Solitro Published
-
Another Analyst Moves to the Sidelines on Tesla Stock After Earnings
Tesla stock is spiraling Wednesday after the EV maker's big earnings miss and Wall Street has been quick to weigh in. Here's what you need to know.
By Joey Solitro Published
-
Confused by Annuities? Making Sense of the Different Types
Many investors aren't sure if annuities are a good option for meeting financial goals. Let's look at the different categories, along with their pros and cons.
By Kris Maksimovich, AIF®, CRPC®, CPFA®, CRC® Published
-
Talkin' 'Bout My Generational Wealth: Baby Boomers
With retirement, each generation has different priorities and challenges. For Baby Boomers, it's a matter of ready or not, here it comes.
By Alvina Lo Published
-
How to Avoid a Big Hassle if Your Financed Car Gets Wrecked
How an insurance check is made out for repairs can cause a world of problems if the lienholder is left out.
By H. Dennis Beaver, Esq. Published
-
Estate Planning Strategies to Consider as Election Nears
Are big changes in tax laws coming soon? Not likely, but you might want to take advantage of higher estate and gift tax exemptions well before the end of 2025.
By David Handler, J.D. Published
-
How to Get Your Money's Worth From Your Financial Adviser
A good financial adviser will focus on how your financial planning and investment strategy align with your lifestyle and aspirations.
By Pam Krueger Published
-
Think of Prenups and Postnups as Financial Planning Tools
These contracts provide a clear framework for asset management and protection and are especially useful if you get married later in life.
By Andrew Hatherley, CDFA®, CRPC® Published
-
Congratulations on Your Raise: Three Things to Do With It
We're not saying you shouldn't spend it on a new car, but there are some considerations to guard against lifestyle creep and to help ensure a comfy retirement.
By Andrew Rosen, CFP®, CEP Published
-
Check Off These Four Financial Tasks to Finish 2024 Strong
The new year is a popular time to set financial goals, but now is the ideal time to check how you're doing. Four tweaks could make a big difference.
By Daniel Razvi, Esquire Published