What Women Don’t Know About Life Expectancy Can Hurt Them

woman in retirementWhile you may have heard that women have longer life expectancy, on average, it can be hard to see the importance. After all, looking at the Social Security tables, you might think that an average of two extra years of life won’t have that much of an impact on your planning.

But those averages mask the profound differences that men and women face in terms of lifespan and related concerns like disability.

Here’s what you need to know, and what you can do to start building a more robust retirement plan.

The life expectancy puzzle

Even with all the life expectancy statistics floating around out there, it can be difficult to grasp just how significant these differences are.

In fact, among every age group and for every phase of life, women have higher survival rates than men.

From conception to centenarian, women are expected to live longer on average – this includes disasters like famines and epidemics, and is a phenomenon that is seen around the world regardless of women’s social status.

In fact, while newborn boys outnumber girls 104 to 100, women represent the majority of 25-year olds. Globally, among centenarians, women outnumber their male counterparts 9 to 1.


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The health paradox

There is a cost, however.

On average, women are more likely to be affected by disability, pain, and chronic illness. Older women may experience greater physical declines and have a harder time recovering from disability. Illnesses like allergies, arthritis, and headaches are also more common in women – these can have a significant impact on quality of life without necessarily being lethal (men, by contrast, are more likely to be impacted by fatal illnesses).

In other words, women may live longer on average, but they’re also more likely to spend a higher proportion of their lives managing disability and other health problems.woman in retirement

How can you use this information?

 It’s important to remember that statistics are not destiny, for men or for women: these are averages. While the overall research in this area is robust, your individual outcomes can vary.

That said, we believe it’s sensible to incorporate this type of information into your retirement plan. After all, if a wife’s probability of living to 100 is higher than her husband’s, a robust retirement plan ought to account for those extra years.

This is of particular importance when you incorporate another key difference between men and women: average pay. In 2015, women earned about 80 cents on the dollar compared to men. While married couples often pool resources in a way that can make up for this, single women can face a squeeze as a result.

In short, when we’re asked how a financial plan can and should account for issues specific to female retirees, these are the numbers we look at.

Building a better retirement plan

 There are three key ingredients in many retirement income plans.  These include:

  • Your income sources: the level of income they generate, the stability of that income, and the length of time you can count on that income.
  • Your asset base: the savings and other resources you can draw on in an emergency or if you experience a loss of income from another source.
  • Your expenses: these include your basic lifestyle costs as well as potential out-of-pocket medical costs and, potentially, the cost of longer-term illnesses or health issues.

Balancing these three is, of course, an individual matter. The right mix of income sources, savings and assets, and budgets will depend on your personal financial situation and your preferences.

Generally speaking, for those who expect to live longer and who have a higher probability of experiencing disability or illness, it can make sense to adjust your projections for:

  • A longer retirement – more years of income and expenses, in other words
  • Higher annual healthcare costs
  • The potential cost of longer-term health support services

By adjusting your concept of what retirement will look like to account for the average differences between men’s and women’s life expectancy and health outcomes, you can start building a retirement plan that’s more likely to be robust should those differences arise.

Don’t get caught up by the retirement transition

 Accounting for average lifespan is just one thing you can do to strengthen your retirement plan. But it’s certainly not the only thing! For more, we recommend our Retirement Stress Test workbook, which walks you through some of the key risk factors you might be facing in your retirement transition. With this guide, you’ll discover more about where your strengths lie and what areas could use improvement.


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Let Us Help!

We can discuss this topic and more at a complimentary appointment. As a bay area retirement planning coaches, we can give you a review and make suggestions based on your retirement objectives.

Important Disclosures

The opinions voiced in this article are for general information only. They are not intended to provide specific advice or recommendations for any individual and do not constitute an endorsement by United Planners.

To determine which investments may be appropriate for you, consult with your financial professional. Please remember that investment decisions should be based on an individual’s goals, time horizon, and tolerance for risk. Neither diversification nor asset allocation can ensure a profit or prevention of loss in times of declining values. United Planners does not render tax advice.

Securities and advisory services offered through United Planners Financial Services, member FINRA, SIPC. Pasquale Vitucci, CA Insurance Lic. # 0758212, is an Endorsed Agent of Vitucci & Associates Insurance Services CA Insurance Lic. # 0I06319. Vitucci & Associates Insurance Services and United Planners are separate and unrelated companies.
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Further Reading

Longevity risk https://www.cmu.edu/CSR/case_studies/women_live_longer.html

Health and income gaps between men and women https://www.weforum.org/agenda/2017/03/why-do-women-live-longer-than-men

Survival http://www.pnas.org/content/pnas/early/2018/01/03/1701535115.full.pdf

Disability https://www150.statcan.gc.ca/n1/pub/82-003-x/2014012/article/14127-eng.htm