It's the good news and the bad
news: Women are living longer, and not only that, living longer with longer
periods of vibrant activity.
So what's the bad news? Longer
life means longer periods of funding your lifestyle and potentially ensuring
you have the financial resources to maintain the quality of your lifestyle with
choices. And living longer means greater risks of longer periods of
debilitating illness.
The retirement risks for women
typically reported by various experts include outliving assets, loss of spouse,
decline in functional status, health care and medical expenses, and inflation.
These can all be attributed to the good news of longevity.
While these risks are real, it is
argued that coupled with these risks, we find women have lower earnings and
wealth in general and the very nature of women's roles in society cause women
to plunge into financial crisis.
Caregiving is one of the real
retirement risks because most women spend on average 19 years in various
caregiving roles, resulting in lost earnings that impact pensions, social
security, and retirement account savings.
Women’s earnings lag as they take
time out of the workforce to care for children, parents, spouses and friends.
The median earnings for women working full time are less than 80% of what men
earn and women are less likely to have pensions.
Now to the complexities, the
notion that women utilize more of the health care expenses of our nation.
According to Fidelity's Retirement Health Care Cost Estimate, a couple aged 65
retiring this year can expect to pay an estimated $245,000 on health care
throughout retirement, up from $220,000 during the prior year.
These represent routine
healthcare costs such as health insurance premiums, deductibles, co-pays and do
not include skilled nursing care.
So what should be done for protection
from the devastating costs of skyrocketing healthcare costs, both routine and
long-term care?
Planning for how money will be
spent during retirement is crucial. Mitigating any retirement risk can be accomplished
through proper planning. A plan helps to establish a baseline for the cost of someone’s
lifestyle today, builds in a modest level of growth, adds taxes and inflation,
and then includes the cost of retirement.
The only way to derail a rocky
road through retirement is to plan for the unknowns, and one is health care. When
healthy, it's challenging to think about getting sick or needing custodial care
because you've had a decline in functional status and can't care for yourself.
But rising costs should be built in to the plan for healthcare, skilled nursing
care, dental health costs, vision, hearing, etc.
The components of a solid
retirement plan include:
1. The cost of retirement
lifestyle with consideration given to current lifestyle costs to age 100,
inflation, taxes, reasonable growth rate given current life stage,
unanticipated health care costs, impacts of lost income, and impacts of long
term care needs.
2. A gap analysis of where someone
is today against where they need to be will help determine the likelihood of
achieving goals, and most importantly, not running out of money.
3. A customized plan that takes
the gaps and customizes all solutions to include bucket strategies, integrated
financial solutions, etc. that enable the achievement of the goals which drive
the plan.
4. An annual financial physical
to make sure one is tracking to the plan and life events, or
"suddenlies," don't derail the plan.
Click
here for the original article from New
York Daily News