Unique Challenges Women Face in Retirement

Women face distinct challenges in retirement. Longer lifespans, lower lifetime earnings, and higher healthcare costs can create financial hurdles that require careful preparation. Single women, couples, and widows should keep these unique challenges in mind when making long-term plans, ensuring they have strategies in place to maintain financial stability throughout retirement.

Longevity and the Risk of Outliving Savings

Many couples benefit from financial plans built around the assumption that one spouse will outlive the other. Couples planning for retirement should be prepared for either widowhood or widowerhood, but data shows it’s more likely that women will outlive their husbands and will need to stretch their retirement savings further.

Couples and single women often benefit from retirement plans that incorporate sustainable withdrawal strategies, investments that balance long-term growth with risk reduction, and income sources that provide lifetime payouts, such as annuities. This is especially important if they rely on income that’s dependent on the survival of the other spouse.

Lower Lifetime Earnings and Social Security Gaps

Career breaks for caregiving and the persistent gender wage gap often leave women with lower lifetime earnings. This directly impacts Social Security benefits, pension payouts, and retirement savings in 401(k)s, IRAs, and other retirement accounts.

Couples should carefully consider Social Security claiming strategies, especially if one spouse spent fewer years in the workforce. Coordinating when to claim benefits, utilizing spousal benefits, or delaying claims can help maximize lifetime income and provide greater financial security for the surviving spouse.

Working with a financial professional to explore options like catch-up contributions or spousal IRAs can also help offset lower lifetime earnings.

Potential Reduction in Benefits or Retirement Income After the Death of a Spouse

Some retirement savings accounts and income streams may be reduced or lost after the death of the primary account holder:

• Pensions – If a single-life annuity was chosen instead of a joint-and-survivor option, pension payments stop entirely when the account holder dies. Some survivor options reduce payouts by 50% or 75% of the original benefit.
  

• Social Security – The surviving spouse only receives one benefit—their own or their spouse’s, whichever is higher. If the deceased spouse claimed benefits early, the survivor’s benefit may also be permanently lower.
  

• Annuities – Single-life annuities do not pass on payments to a surviving spouse. Joint-and-survivor annuities reduce payouts unless a 100% survivor option was selected.

Higher Healthcare and Long-Term Care Costs

Due to their longer lifespans and higher likelihood of needing long-term care, women often face greater healthcare costs in retirement. Medicare does not cover all expenses, and long-term care costs can deplete retirement savings quickly.

Some retirees consider options like long-term care insurance, hybrid life insurance policies with long-term care riders, or setting aside specific funds to cover medical expenses. Planning for these costs and investing in specialized long-term care policies early can help protect other assets.

Investment Risk and Inflation Protection

With longer retirements, women must ensure their investments and income keep pace with inflation to maintain purchasing power. Many retirees are understandably risk averse and prefer a conservative investment approach that prioritizes safety over long-term growth.

There is a risk that an overly conservative approach can lead to financial shortfalls later in life. A balanced strategy that includes both stable income sources and growth-oriented investments can help women maintain their purchasing power throughout retirement.

Retirement planning professionals and financial advisors can help you find the ideal middle ground for your situation and portfolio.

Widowhood, Financial Confidence, and Independence

Many women will eventually manage household finances alone, either due to widowhood or divorce. In some households, one spouse takes on most financial planning tasks, which can leave the other spouse less prepared to manage assets independently after the planner’s passing. To prevent financial challenges later, both spouses should stay actively involved in long-term financial planning.

Estate planning discussions, financial education, and working with a trusted advisor can help women feel more prepared for financial independence. Additionally, adult children should have a general understanding of their parents' financial situation and retirement plan in case they need to assist one or both parents in the future.

Planning Ahead for a Secure Retirement in Phoenix, Peoria, Scottsdale, or Tempe

Single women, widows, and couples can take proactive steps in their retirement planning approach to increase their likelihood of achieving a sustainable and comfortable retirement. Whether managing investments, planning for Social Security, or preparing for long-term care, Fullerton Financial Planning is here to provide assistance and advice. Call us at (623) 974-0300 to schedule a meeting or attend one of our upcoming seminars or webinars to learn more.