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Retirement Planning

What the longevity gap means for women's retirement

Older woman sitting across from female financial professional with laptop

Good news: Women live longer. Bad news: Women live longer.

Longevity risk — meaning the risk of outliving one's savings — is a significant fear for many Americans. Forty-one percent of certified public accountant financial planners polled by the American Institute of CPAs said running out of money was their clients' number one financial concern. The threat posed by longevity risk may be even greater for women, who often face unique challenges in their pursuit of retirement security.

When it comes to being financially ready for retirement, gender matters a lot. Economic and cultural factors are contributing to a gender gap in retirement, with men often faring far better than women.

In fact, according to data from the U.S. Census, women are more likely than men to have nothing saved for retirement. Among those that have saved for retirement, only 22% of women have $100,000 or more in personal retirement savings compared to 30% of men.

Part of the problem is that women earn less over the course of their lifetime, due to the gender wage gap. According to data from the U.S. Census Bureau's Quarterly Workforce Indicators, women in the United States earned 30% less than men during the third quarter of 2020.

In addition, women live longer than men and work fewer years than men if they are the caregivers for their children. This frequently leads to less money in women's portfolios when it comes time to retire.

How you can help your female clients prepare for a longer retirement

As a financial professional, you can do your part to offset these challenges by taking a proactive approach to help female clients maximize their opportunities. When appropriate, consider the following tips for helping female clients prepare financially for a longer life in retirement.

Encourage clients to save more now to overcome the income gap.

According to a recent Pew Research study that analyzed hourly earnings of both full- and part-time workers in the United States, women earned 84 percent of what men earned. "Based on this estimate, it would take an extra 42 days of work for women to earn what men did in 2020," the report says.

To help female clients overcome this, encourage them to put a plan in place. Urge them not to undervalue their skills and to ask for a raise if their compensation falls below their peers. They can use web resources (such as to determine if their salary is comparable.

From a practical standpoint, you can ask female clients to consider maxing out what they can save via their company's retirement plan and to save beyond that in other accounts.

Ask clients to consider investing differently to bridge the investment gap.

Do women take as many financial risks as men? Women may be legitimately more risk-averse for economic reasons, but they are also perceived as more risk-averse, which means they may have less support or validation when they want to take risks.

A University of Missouri-Columbia study found that women tend to be less risk tolerant in their investing stance than men. Life events that affect income, such as caregiving, are a main contributor to their uncertainty about accepting risk.

While minimizing risk is important, being too risk-averse can shrink a portfolio's growth potential. For women who anticipate living longer while saving less, it may be necessary to move out of their comfort zone and adopt a more growth-focused mindset.

Understanding the difference between risk tolerance and risk capacity, meaning the amount of risk an investor must take to meet their goals, is critical. When women better understand how much risk they need and can afford to take, they're in a position to make investment choices that can help downplay longevity risk.

As a financial professional, one of your most important jobs is to help clients improve their financial literacy. For your female clients, empower them to take adequate risks with investing when appropriate.

Remind clients to keep life expectancy top of mind.

According to data from the Centers for Disease Control (CDC), the life expectancy for women is 80, compared to 74 for men.

Aging isn't easy, but eating well, exercising and reducing stress can help women live healthier lives as they age. But even with a healthy lifestyle, women should prepare for health care expenses and potential long-term care needs in retirement.

Health care expenses seem to increase year over year and that trend shows no signs of slowing down. Medicare may cover some of those costs but it has its limits. Long-term care in a nursing facility, for instance, is a significant expense that doesn't fall under the Medicare umbrella.

Also make sure female clients are prepared to navigate retirement in the event of divorce or death of a spouse. "Gray divorces," divorce after the age of 50, have nearly doubled since the 1990s, a Pew Research Center report finds.

In addition to fully understanding their Social Security benefits, women should also consider delaying retirement to maximize their Social Security income. Even an extra year of work — working until the age of 66 — can add up. And healthier clients will benefit even more, given that they'll likely spend less on health care costs.

If a woman waits to claim Social Security, her monthly benefit will increase every year from the age of 62 (the soonest she can claim) until age 70 (the final age at which she must claim), according to the Social Security Administration. Waiting as long as possible to retire can make a big difference to a woman who may have taken a break from working and earned less over her lifetime.

Discuss supplemental retirement income options.

The three-legged stool was once an often-used analogy for retirement planning, with pension income, Social Security benefits and personal savings representing each leg of the stool. With pension plans declining in popularity and the future of Social Security uncertain, the stool has become somewhat wobbly.

For women who are relying on Social Security benefits (both theirs and that of their spouse if they're married) and personal savings alone, finding a replacement for the third leg of the stool is vital. That's where an annuity could become an important part of women's retirement plans.

If your client is interested in annuities, explain that an annuity can generate tax-deferred growth along with guaranteed lifetime income for its owner. Particularly useful for married couples, an annuity can also pay a death benefit to the surviving spouse or any other named beneficiary. That can offer financial peace of mind for women who worry about outliving their spouse.

Review how much your client currently has saved and their anticipated expenses in retirement to help women better determine if, and where, an annuity may fit into their larger longevity risk management picture.

Every year your female clients hold off on retirement will create a stronger financial future for them. No matter what approach your client chooses to take, you can help them feel prepared for retirement by helping them create an informed plan for retirement income that will serve them well over the long haul.

Learn more about how you can encourage your female clients' physical and financial health and well-being.


As clients determine what annuity might be right for them, they should remember that annuities are intended as vehicles for long-term retirement planning, which is why withdrawals reduce an annuity's remaining death benefit, contract value, cash surrender value and future earnings. Withdrawals from annuities may also be subject to income tax and, if taken prior to age 59 ½, an additional 10% IRS tax penalty may apply. Because Protective and its representatives do not offer legal or tax advice, it is important that clients talk with their own legal and tax representatives about their specific tax situation.

Annuities issued by Protective Life Insurance Company (PLICO) Nashville, TN, in all states except New York and in New York by Protective Life & Annuity Insurance Company (PLAIC), Birmingham, AL.

Product guarantees are backed by the financial strength and claims-paying ability of the issuing company.

Annuities are not a deposit, not insured by any federal government agency, carry no bank or credit union guarantee, are not FDIC/NCUA insured and may lose value.



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