Women and Retirement Planning: Taking on Unique Challenges

Women may need to take on new responsibilities and plan for the long term as they consider their retirement planning strategy. 

mother and daughter roasting marshmallows on a fire

Women generally live longer than men. According to current Social Security Administration life expectancies, the average 65-year-old woman will live to age 86, while the average 65-year-old man will live to age 84. That may not seem like a big difference, but it can make a major difference in their retirement planning strategy. Consider the fact that if a woman is a few years younger than her spouse, she may have income needs for several years on her own. 

And that's only for couples who grow old together. Many women enter retirement single, widowed, or divorced. According to a report from the U.S. Census Bureau in 2011, the average age of widows was 59.4 for those widowed in a first marriage and 60.3 in a second marriage. 

Why does it matter? The extra years women tend to live have a financial cost. Women will incur an average of $300,000 in out-of-pocket health care costs after age 65, according to a recent report by HealthView Services.  

Financial inexperience
While conceiving the idea may be difficult, retirement planning for women should account for the possibility that you may live longer than your husband or partner. After decades of marriage, life without a spouse can bring a number of big changes. If you don't prepare financially, you may be in for an unpleasant shock. 

For many older couples, "the breadwinner was the husband, and he also was most likely taking care of all their finances," says Amanda Weitman, a Wealth Advisor with Wells Fargo Private Bank in California. That means many women may have chosen not to be responsible for the family money in several decades. 

That can create problems. A woman may suddenly realize she doesn't have online access to the bank accounts her husband was using to pay the bills. In some cases, the family's credit cards may have been in the husband's name. When he dies, the cards may be canceled, leaving the widow without a credit card for daily purchases — and no credit history, making it more challenging for her to apply for one. 

Women will incur an average of $300,000 in out-of-pocket health care costs after age 65, according to a recent report by HealthView Services.

"Are you both listed as owners of a safe deposit box? Do you know the passwords for each other's computers?" says Weitman, listing questions that both spouses should have answers for. She says she often takes clients through a "peace of mind" questionnaire that covers many of these details, helping both husband and wife to be aware of where all their assets, records, and important documents are.

New roles, responsibilities, and opportunities
Retired, newly widowed, or divorced women face some important decisions: How will they manage their investments to help avoid the potential of outliving their income? Should they consider staying in the family home, moving closer to relatives, or scouting out a retirement community? 

Weitman says it's critical that you know who your accountant, wealth planner, estate attorney, and insurance agent are — especially if you're expecting a life change.

Having a trusted set of advisors is critical in part because women often can find themselves making investment decisions for the first time.

Women often think they need to invest more conservatively than men, says Tracie McMillion, Head of Global Asset Allocation at Wells Fargo Investment Institute, because they think that will help them preserve their funds for longer lives.

"That might not be the best way for women to invest," McMillion says. "If you've got a longer time horizon, which is essentially what women have, then you may be able to take on more risk. That way, you could potentially build up more assets to last through your later years."

Another item that may need review is health care expenses. Ideally, a couple will plan for their future health care while they are still relatively young. If that hasn't happened, it's one of the first things women should address.

"Health care insurance is generally less expensive the earlier you purchase it," says Lisa Hutter, Senior Director of Planning at Wells Fargo Private Bank. "Many times you don't realize you should have it early enough, and then when you do, it's gotten much more expensive."

Considerations around remarriage
What you do later in life also may influence the financial choices you make. Some women find a new romantic partner later in life and sometimes even remarry. That creates a new set of considerations, including adjusting your estate plan. If the woman passes before her new husband and has not changed her will or trust designations, all her assets could end up in her new husband's name. 

"Women in particular should speak to their financial advisors and estate planning attorney to put a plan in place to help protect their separate assets and the future inheritance of their children," says Anne Tinyo, National Director of Life Management Services for Wells Fargo Private Bank in Los Angeles. 

A woman's assets could also be vulnerable to her new husband's financial picture — debts he owes or liabilities from a lawsuit, for example. 

For some women, especially those who relied on husbands to manage finances and household maintenance, the number and complexity of new decisions can seem overwhelming at first. But Weitman says women should have confidence in themselves. 

"You're totally capable of doing it," she says. "Many women need reminders of how much they have accomplished in their life." 

Mark Tosczak is an experienced business writer and marketing consultant based in North Carolina.

What can Wells Fargo do for you?

Whether you’re nearing retirement or have already reached retirement, Wells Fargo Conversations offers a diverse blend of content to help provide options for your life’s second act.

Wells Fargo Wealth Planning Center, part of Wells Fargo Private Bank, provides wealth and financial planning services through Wells Fargo Bank, N.A. and its various affiliates and subsidiaries.

Wells Fargo & Company and its affiliates do not provide legal advice. Wells Fargo Advisors is not a legal or tax advisor. Please consult your tax or legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your taxes are prepared.

Insurance products are offered through nonbank insurance agency affiliates of Wells Fargo & Company and are underwritten by unaffiliated insurance companies.

This information is provided for educational and illustrative purposes only.

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