Report Shows 92% of Female Retirees Do Not Plan for Long-Term Retirement

While half of women at age 65 will likely live beyond age 85, 92% of female retirees and 89% of female pre-retirees do not plan far enough in the future to cover this 20-year period, according to a new report from the Society of Actuaries (SOA).

Titled “The Impact of Retirement Risk on Women,” the report identifies findings from a 2009 retirement survey and argues that because women outlive men on average, they need to better plan for various risks, such as inflation, outliving assets, and long-term care costs.

Despite similar perceptions of retirement risks between men and women, SOA cautioned that the effects of such risks on women can be quite different, and therefore an understanding of post-retirement risks women face is particularly important. For example, the expected average value of the cost of lifetime long-term care services is $29,000 for males and $82,000 for females, in year 2000 dollars. This highlights the need for women to better prepare for the risk of incurring long-term care costs in retirement, the report argues.

“This report underscores the need for women to understand the full-blown drama of retirement,” said Cindy Hounsell, president of the Women’s Institute for a Secure Retirement, who co-sponsored the report with the SOA. “For most women, there is little room for error and being unprepared for nearly a third of their lives will have consequences.”

In particular, the SOA report details five key risks affecting women in retirement, including:

1. Outliving assets: Four out of 10 women over 65 living alone depend on Social Security for virtually all of their income.

2. Loss of spouse: Eighty-five percent of women over age 85 are widows, compared to 45% of men.

3. Decline in functional status: Forty-six percent of retired women are more likely to expect to pay for assistance than retired men (34%), during the less active, somewhat limited stage of retirement. Additionally, 70% of retired women are more likely to rely on family or community services for help than retired men, during the least active stage of retirement.

More than two-thirds of women pre-retirees are likely to rely on family or community services (69%) than male pre-retirees (48%), in the less active stage of retirement.

4. Healthcare and medical expenses: Healthcare costs for a retired couple both at age 65 in 2010 can amount, on average, to $250,000 over their retirement years, not including the cost of long-term care.

Fifty-five percent of female retirees and 71% of female pre-retirees are concerned that they might not have enough money to pay for healthcare costs in retirement, compared to 42% of male retirees and 63% of male pre-retirees.

5. Inflation and the economy: Fifty-five percent of female retirees and 76% of pre-retirees report the recent recession has made them feel that they need to save more money.

Sixty-nine percent of female pre-retirees feel that they have to work longer as a result of the economic downturn, compared to 58% of male pre-retirees.

This SOA report highlights findings from the “2009 Risks and Process of Retirement Survey Report,” which was conducted through telephone interviews with 804 adults age 45 to 80 in July 2009.

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Full report “The Impact of Retirement Risk on Women” (PDF format)

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