A couple typically plans for their retirement. What is frequently overlooked is the reality that, on average, women live longer than men. Few retirement plans prepare surviving women for what is effectively her second retirement – a later life stage with new complexities, different needs, and costs just when financial resources and personal resilience may be sharply declining.
According to the Centers for Disease Control, forecasted life expectancy at birth for women in 2019 was 81.4 years compared to men who can look forward to 76.3 years. However, by age 65, women are likely to live nearly another 21 years compared to men who squeeze in a little more than an additional 18 years. Those averages assume that the woman and her mate are the same age. According to Pew Research, women are typically 2-plus years younger than their spouses, thus adding a few more years. The takeaway? Women — and their partners — should plan on a retirement and a half, that is their retirement together, plus a near decade of her living without a spouse.
Essie, a 77-year old widow in Baltimore, lost her husband of five plus decades a few years ago. She laments that, “It’s just different now. We, (she quickly corrects herself) I did not plan on living without him and living alone.” She goes on, “I feel like it’s a whole other life I never imagined.”
Essie, and many women like her, are faced with what might be best characterized as a second retirement. The life after work they planned and saved for as a couple is the retirement many women may have dreamed of, but the life stage that follows is an unanticipated retirement that begins when their loved one passes.
A woman’s second retirement is likely to begin when she is at a much older age – past the years of checking off travel bucket lists, dreams of endless leisure, and other activities featured on today’s brochure images of retirement living. Financial resources are likely to be greatly reduced. Connections with friends and community may have decreased. She may now be managing multiple health conditions. Many of the home tasks that were once shared, e.g., food shopping, cooking, and cleaning, are now the job of one person. Despite the likelihood of these confounding complexities, few couples actively plan for her second retirement.
A recent TIAA study assessed financial and longevity literacy and found that while women may be lagging men in financial literacy, they have a greater understanding for how long they might live. The study found that when men and women were asked about how long they might expect to live, women came out ahead. According to Surya Kolluri, Head of the TIAA Institute,
“…it has been long reported that financial literacy among women tends to lag that of men; when we reframed the question, we found in a flip of the script, women are more likely to demonstrate strong longevity literacy. 43% of women correctly answered the longevity literacy question, compared to 32% of men. A possible explanation of the difference could be that women have traditionally been more influential in healthcare decisions in the household, including those related to the care of older family members, which helps their longevity literacy.”
Knowing you might live longer is not the same as preparing to live longer. Moreover, the TIAA study shows that well over half of women, and two-thirds of men, were unaware of the longevity realities of women living longer.
Couples must plan for two retirements. It is the second retirement that most women will face alone and is likely to be the most costly and complicated. Costs include expenses accumulated from months or even years of caregiving, rising healthcare demands in advanced age, as well as supportive services that may be needed over time.
Complications arise when what was once a lifetime of teamwork, or at least a modest sharing of household tasks to meet everyday needs, suddenly becomes a job for one. Even if there are ample financial resources available, identifying the range of possible services that will be needed, along with who might be the trusted organizations or people to provide everything from routine household tasks to home care, becomes an entirely different set of retirement challenges.
Couples must look past the vision of one shared retirement and plan for her second and solo retirement. This requires candid conversations between couples, their adult children, and focused discussions prompted by financial professionals to plan for her financial security, access to trusted home services and care that she may need in her later years.