The Single Biggest Retirement Risk Women Face
In discussions about retirement planning, much is made of issues like longevity risk, asset allocation, and dealing with unexpected costs like long-term care. And that makes sense: these are serious and important considerations.
But there is another risk out there that is just as important, if not more so, and it overwhelmingly faces women: widowhood.
Most of us don’t like to talk about these things, much less think about them. But this is urgent, and we need to.
The reality of widowhood
Among people over the age of 65, you’ll find that widowhood affects just 15% of men.
By comparison, 45% of women over the age of 65 are widows. Seventy percent of Boomer wives will experience widowhood, and 80% will die single.
These are sad and staggering statistics, but we don’t share them to terrify or depress you. Like the possibility of needing long-term care or encountering a chronic illness in retirement, widowhood is a potential outcome that needs to be included in your retirement plan.
Widows worry – but you don’t have to
A survey of widows found that 50% felt less financially confident after the loss of their spouse. But another survey, of married women this time, found that a majority didn’t have any estate planning documents in place.
This is a serious gap, one that can only be addressed by planning ahead. That means developing an estate plan and a financial strategy that can help one or both spouses through this kind of loss.
Where to start
Your first port of call should be an estate plan. Clear and specific plans for your assets and an updated listing of your financial accounts, properties, and insurance policies is generally a good start.
This undertaking can also help jumpstart a necessary conversation about what you have as a couple, how it can and should be used for your retirement (both together and in the event of a death), and what to do should one spouse outlive the other.
Most Overlooked Retirement Risk For Women: Widowhood
Many Boomer couples have lopsided relationships with money, which puts the uninvolved spouse at risk if they suddenly need to take the reins. Starting these dialogues can at least put you on the same page and give you a lay of the land.
You might also consider putting your assets in trust or establishing other estate planning tools. A more comprehensive estate plan will generally include:
- A will or trust document
- A list of important financial accounts, properties, policies, and safety deposit boxes
- A financial power of attorney
- A healthcare power of attorney (also known as a healthcare proxy)
You can learn more about related estate planning topics in our Investor Education portal, but to build your own plan it’s usually advisable to seek out a qualified estate attorney.
Stress test with thought experiments
Once you have an estate plan in place, you might feel confident leaving it at that. But you might also want to consider some of the other issues that commonly arise with widowhood.
If your spouse was to pass away, what would you do about the following?
- Pension benefits: Are you eligible for survivor benefits from a private pension? What would your spousal benefit from Social Security be?
- Income: Together with benefits, how would your income change should your spouse pass away?
- Insurance: Aside from any life insurance payouts, a key issue facing widows is health insurance. Would you need to obtain a private plan? Pay more for coverage?
This, once again, a starting point, but these issues can give you a sense of some of the complex decision-making and financial planning that widows face. Add grief to the equation, and for many women, this theoretical exercise becomes a consuming source of stress.
That’s why it’s so important to start
You can start anywhere, just start the process of thinking about these topics. It can help you head off a serious additional stressor at a time of life when you need it the least. You don’t have to have a brilliant or complicated financial plan in place. Just have something that act as a foundation and a guidepost for the future.
No one likes to think about these things, and that’s okay, but the reality is that most women will have to think about them anyway. Consider laying the groundwork now so that you can have more freedom to honor your grief later, should this happen.
Look through our Investor Education portal for more great advice on estate planning topics and issues. Also, consider downloading our free eBook series on women and widowhood, The Most Overlooked Retirement Risk Facing Women.
Over 3 easy-to-use eBooks, we cover some of the key risks widows face, how to prepare your finances for the possibility, and what to do if your husband or loved one has recently passed away. It’s an informative and useful guide for those who need some help in navigating this difficult subject.
The Most Overlooked Retirement Risk For Women: Widowhood
Download Part 1 of 3 Series