Women encounter unique challenges for retirement that often begin long before they exit the workforce. A 2016 study by the The National Institute on Retirement Security, Shortchanged in Retirement, found women “80 percent more likely than their male counterparts to be impoverished at age 65 and older.”
From the beginning, the deck is biologically and socio-economically stacked against women to experience greater financial insecurity than men in their retirement years.
For one, female life expectancy is a minimum of two years longer than male, necessitating that women’s retirement funds stretch farther, especially in relation to higher lifetime medical expenses.
Additionally, women are more likely to experience higher rates of unemployment and to earn roughly 80 percent of what men earn. Women also tend to experience more income inequality due to a higher number of work absences and career interruptions related to family care.
While the retirement savings divide is narrowing between men and women, the closure is deceptive. This is based, in part, on men losing traditionally stable financial ground, a troubling trend with implications for both sexes.
The gender gap in retirement savings can be understood through the metaphor employed by the study’s authors of a “three-legged stool” of middle class retirement: social security, a pension, and personal retirement savings. “After decades of restructuring in retirement benefits and stagnant household incomes, this three-legged stool is broken, especially for women,” conclude the authors.
Dependence on those three traditional sources of retirement income puts many women at risk for serious financial struggle, with the study finding that more women than men remain in the workforce as they near retirement. A woman’s age, race, marital status, and other factors affect their financial security more than the same variables among men.
Of more concern is that the gap increases as retirees age, with women age 75 to 79 three times more likely to be impoverished than their male peers.
Women, who have traditionally not been raised with the expectation to think as much about financial matters as men, tend to exhibit less confidence in relation to personal finances and investing. Closing the confidence gap is the key to leveling the playing field of financial wellness.
According to Prudential’s 2014-2015 Research Study on Financial Experience & Behaviors among Women, 36 percent of women do not feel they adequately understand the evaluative criteria in making sound financial decisions, 28 percent of women say they are dependent on their employers to obtain information about financial matters and retirement products and services, and only 20 percent feel the financial services industry is responsive to their needs as distinct from men’s.
The Prudential study highlights the need to empower women by expanding their financial knowledge, and doing so in ways that are free of jargon, easy to understand, and more “personal” than offerings aimed at men.
Especially for women whose retirement funds are stretched thin or rapidly dwindling, it pays to be aware of financial options. For example, if a woman holds a life insurance policy, it may make sense to look into a life settlement, which allows her to sell her policy to a licensed, institutional buyer for more than the policy's cash surrender value but less than the net death benefit. Life settlements are paid in cash to the policy seller in a lump sum, allowing he or she to “unlock” the liquidity of the asset to pay for urgent needs or pressing care expenses. By doing so, they also eliminate the burden of paying premiums.
If you’ve been thinking about retirement planning and wondering what makes sense for your future, Ashar Group can be a part of that process. We’re secondary market and valuation specialists whose experts adhere to the strictest of ethical standards in helping you unlock the value of an existing life insurance policy. Whether an asset’s value is dispersed through a life settlement, retained death benefit, or a long-term care benefit, we’re here to assist you in confidently taking the next step toward a secure future. We invite you to contact us today.