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.

(Image credit: Alistair Berg)

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.

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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.


This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Marcy Keckler, CFP®, CRPC®
Senior Vice President, Financial Advice Strategy and Marketing, Ameriprise Financial

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.