Women in retirement: Longer life, greater costs fuel need for better planning

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Women and men have as different an experience in retirement as they do in life: on average, women live longer, earn less and need more assets to pay for their health care than men do.

“Women have come a long way both personally and professionally, but when it comes to their finances, there is still a trail left to blaze,” said Lorna Sabbia, head of Retirement and Personal Wealth Solutions for Bank of America Merrill Lynch.

Merrill Lynch released a study about women’s finances, “Women and Financial Wellness: Beyond the Bottom Line,” that found 70 percent of women believe that men and women have a fundamentally different life journey, reinforcing the need to better understand women’s financial concerns and opportunities.

Among the study’s most remarkable findings was the difference in health care costs. Women are more likely to have chronic health conditions and have two times the risk for Alzheimer’s disease than men. Combine that with a longer life and an increased need for long-term care in later years and the average woman pays $195,000 more in lifetime health care costs than men do.

The health differences alone increase the need for women to access assets that can include life insurance policies. As needs like long-term care change the retirement journey, holding onto a life insurance policy can become just another burden. Many would be better served receiving cash or guaranteed income for the policy that they can apply to late-in-life needs.

The Merrill Lynch study is based on a nationally representative sample of 3,707 respondents, including 2,638 women and 1,069 men.

Other findings of the study:

Women look beyond the bottom line: Seventy-seven percent say they see money in terms of what it can do for themselves and their families. Eighty-four percent say that understanding their finances is key to greater career flexibility. When it comes to investing, about two-thirds of women look to invest in causes that matter to them.

Superior longevity: Longevity needs to be a factor in everyone’s financial strategy, but more so for women, who on average, live five years longer than men. Eighty-one percent of centenarians are women. While 64 percent of women say they would like to live to 100, few feel financially prepared, with 44 percent of women stating they worry they will run out of money by age 80.

Confidence in all but investing: The study finds that women are confident in most financial tasks, such as paying bills (90 percent) and budgeting (84 percent). However, when it comes to managing investments, their confidence drops significantly; only 52 percent of women say they are confident in managing investments, versus 68 percent of men. Millennial women were the least confident at 46 percent. Of women who do invest, their financial confidence soars; 77 percent of women who invest feel they will be able to accumulate enough money to support themselves for life.

A trail left to blaze: Women experience a gender wealth gap – the difference between men’s and women’s financial resources across their lifetimes, including earnings, investments, retirement savings and additional assets. This wealth gap can translate to a woman at retirement age having accumulated as much as $1,055,000 less than her male counterparts.


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