Retirement Planning for Women: Longevity, Income, and Risk

Women often face a different retirement planning equation. Longer life expectancies, career interruptions related to caregiving, lower average retirement savings, and the increased likelihood of managing finances alone later in life can all influence retirement income decisions.

This episode examines Social Security timing, survivor benefits, pension elections, long-term care risk, and the role of guaranteed income in creating a more dependable retirement structure. The discussion also explains why married couples should evaluate how the financial plan would function after the death of either spouse.

The episode offers a practical framework for understanding these risks and building a retirement plan that can continue working through changing family and financial circumstances.

Transcript

SPEAKER_02 0:00

On this week's episode of The Capitalist Investor, it's for the ladies. And what I mean by that is that women tend to live longer, earn less, save less, and have far more likely to spend their final years managing their finances alone. Today we're gonna talk about retirement planning and how it looks fundamentally different between women and men and what to do about it.

SPEAKER_01 0:27

Hey Tone, what's going on, man? How are you? What is up, my man? How you doing? I'm good, man. I'm good. Alright. So uh so yeah, got a good uh interesting topic this week.

SPEAKER_02 0:37

Yeah, I I think we are you know, we're gonna talk about you know women in finance this week. Yeah, I think um, you know, a lot of you know, we don't we usually use everything as a broad statement. Let's talk about like you know, so there's a lot of you know, there's women out there that go at finances alone and sometimes don't know what to do, who to trust. And you know, that's what we're here to do today.

SPEAKER_01 1:01

Yeah, absolutely.

SPEAKER_02 1:02

All right.

SPEAKER_01 1:02

So let's dive into it here. So, yeah, a couple uh stats up top. You know, basically, um, there is a gap between men and women in a lot of these different uh categories. Uh the first one is the savings gap. So women um on average save about 39% less um compared to men, uh, about 44,000 um median retirement savings for women as compared to 91,000 for men.

SPEAKER_02 1:30

Yeah, and and I I find the one stat very um eye-opening. So, like even single men and women, they save a lot less than married couples, right? You know, having that unit is definitely just more um, you know, it's more expansive, right? But for women, uh between 55 and 65, it's 88 grand. For men, it's 160 uh 136,000, but for married couples like over 400 grand. I mean, it is stifling how the the the metrics and the differences. Now, the other part is is social security, right? And and it's a it can become a compounding issue because what happens and you know, and it's more statistics, but women tend to earn less than men. So uh when we start taking a look at social security, it's based on it's it's not gender based, it's based on how much you make, right? Right. So if you earn less, you're gonna receive less. Now, this is where we have to now take in the consideration that women live longer. Right. And we've come out here on this show and beat the drum like, hey, maybe you should consider taking social security as soon as you can. Right. Because we don't know what's gonna happen next. And uh for women, maybe we we have to be very diligent on this decision because if you're living longer, it probably makes sense to delay because every year you delay it goes eight up eight percent plus the cost of living, and you're gonna live longer. So it could be you know almost worth $90,000 during your lifetime if you delay Social Security, you know, whether it's eight years or five years or three years, it's it could be an exorbitant amount of money. So that's one other thing to talk about. Um and then there's four structural forces driving the gap, um, all hitting simultaneously. We we talked about the wage gap. Then we talk about, you know, like when we when we have aging parents, who's normally taking care of that person? Right. Mostly not the men, because we just don't have that gene. And it's more like 60% of caregivers are women, and that takes time, energy, and maybe missing work, right? Because you're you're taking care of an in an aging population. For sure. Right. And then we got the longevity factor. You know, women are gonna live five to ten years longer. You know, I I love watching those things on like on X or like this is why women let live longer. You got some dude like, you know, just playing with knives or something weird, jumping out of the plane, but yeah, just like doing some weird stuff, man. So um, and then the solo factor, right? Whether you've never been married or you're a widow, right? There there is more, it's more likely that you may enter some point on the back end of your retirement and and you know lifespan that you're gonna be at this alone. And unfortunately, and this is kind of where my mom has fallen in, is that you know, as you get older, obviously there's condensance issues, right? And sometimes and I don't want to say it like I don't mean this to be derogatory, but sometimes you just get stuck in I don't know, I don't want to call it the stone age, but when you get a certain age, like you don't care about technology, you don't care about learning new things, right? And you're you're you get stuck five years, ten years, fifteen years behind. I mean, my mom doesn't, I don't think she knows what a smartphone is. She, I mean, she kept on asking me like for flip phones, right? Like, I I had to, you know how hard it was to find a flip phone? It's impossible, man. So um, so there's that, you know, and again, just the you know, the the data says, you know, like more m women are more likely to be more stressed out about retirement than men.

SPEAKER_01 5:24

Yeah, for sure. Yeah, you know, and we um you know, this is something we've kind of always uh talked about, especially when it comes to uh long-term care, um, because um, you know, something like seven out of ten people in a long-term care facility are women, uh, based on those numbers that we just talked about. So um, you know, typically um men are are or women are outliving men, and typically in a relationship I shouldn't say typically, but it seems to be that um, you know, the the usually men are a little bit older, so there's just a natural gap where essentially the the woman is in better health than the man, right? She takes care of of the man and then he passes away, and then you know, she needs some form of care.

SPEAKER_02 6:12

And and that instance right there could deplete retirement assets, absolutely, yeah. Right? You know, as somebody, you know, you don't know what you don't know what's gonna happen, right? Yeah, uh especially if it's a cognitive issue, Alzheimer's, dementia, things like that. Like those are you know, those are long extended periods of time. Yeah. So um so when we get to like social security, we we we touched base on it here in the first segment, but like on this one, it's what do you do, right? You know, if you just assume nothing, nothing's going to change in the future, you delaying social security, it makes a lot of sense, but the cons behind that is you're depleting your other assets because you don't have that cash flow. That's can be a concern, uh, should be a concern. And then um the uncertainty with social security. We beat that drum so many times in 2032. I don't know what's gonna happen. The trust fund's gonna run out of money. So is everyone getting a pay cut? Are you gonna be tax different? You're gonna receive it at different times? Is there so that's my that that would be those that is that is such a that's why I mean we're gonna get to it, but that's why a financial plan is like can you sustain your lifestyle and your retirement plan if you delay, right?

SPEAKER_01 7:28

So for sure. Um, you know, the um the spousal and survivor benefit um is also an important one to know um when you're looking at social security. So um essentially probably the easiest way to look at it is if you know you're a married couple, uh, one person passes away. Typically, the surviving spouse can take the higher of the two social security amounts. Right. Um, so you know, like we said, we'll talk about it in the planning, but um, that's good to know before you start turning on your benefits, right?

SPEAKER_02 8:04

Yeah, and well that the other thing is is if you if you're lucky enough to have a pension, right? Having turning on, you know, their single life or joint life survivor, right? Being, you know, I don't want to say calling it being greedy, but like if you take the single, obviously it's more money, right? Right. But if something happens, there's no there's no parachute. Yeah, right. So being prepared to understand what's going on with those numbers is very is very important, right? And uh taking the consideration that to take the survivor spouse is just it's a no-brainer, man. Yep.

SPEAKER_01 8:37

So and you already hit on it, man, but it it's it's getting close, you know. Um, when we when we first got into this uh business, um, I think the first number that I taught was Social Security was gonna run out in like 2042. I think that was probably the first number. Um, so back in you know, 11, 12 when I was teaching those classes, right? Um, so in and just in the course of 15 years, that number's all the way down to 2032. Um, and I'm sure it's probably gonna run out. Well, I'm not sure, but it probably gonna click another year or two.

SPEAKER_02 9:12

So I always say this every time we talk about that, I feel like you know, uh that number is getting closer to me, and I'm getting closer to it because I'm I'm aging, right? So yeah, all right. So here's a here's the practical playbook for this scenario. You know, what what women can do right now is first and foremost, you can just save more, right? I know it's easy to say, but probably more difficult to do, obviously. Right, but there are there are things. So if you're over 50, there's catch up provisions, right? If you get close to maxing out IRAs, 401ks, there's extra money that you can save. Um modeling, so these are these are a good one. So like modeling a financial plan for you know uh the demise of a spouse, right? If you're a married couple, right? Like that's that's huge. And that's uh so that's one of the reasons why a lot of you know couples and and married couples pick you know a financial advisor because some and I'm not gonna say who's at fault or not fault, but like who's there's one spouse that doesn't understand the finances, right? It's just not their forte. And the other spouse is typically like, man, something happened to me like this one over here is not in a good situation, right? Yeah, I want them to know somebody to that I trust and that they like, right? Right? So it's it that's where it's like, hey, I I can do this on my own, but if I fall over tomorrow, I've heard this from men and women, yeah, right? Like I need somebody there so like the that like things aren't balls aren't drop, things are don't you know blow up in people's faces, right?

SPEAKER_01 10:53

Yeah, for sure. Yeah, I'd say that's you know, a conversation I have frequently with my clients. Um, and you know, uh a lot of people just fall into kind of that age um range we talked about. Um man maybe being a a year or two older, um, longevity for men a year or two shorter. So, you know, it's frankly smart planning to make sure you have someone in place if if something uh happens to you first. Yep.

SPEAKER_02 11:22

Um you know, built like looking and exploring um guaranteed income sources right now. You know, obviously we have social security, you might have a pension, but we also what about the self-pensions, annuities that have guaranteed lifetime income, right? Do those make sense? Because if we can create a stable floor with guaranteed income, at least we can build around that. Absolutely. That that was something when when my my mom became a widow, my stepfather passed away. I'm like, holy cow, right? Like she she don't know anything about her her investments whatsoever. Right. And I'm like, man, I I just for her, and and I just knew this right away. I'm like, I have to create as much guaranteed income as possible so she doesn't freak out. Is that pretty is that simple, man? And I don't like to say it this way. I say I say it more jokingly, but I'm like, man, if if something happened with her money, whether she spent it unknowingly or market turns and stuff, she runs out of money. Guess what's happening? She's living in my basement. So I I I wanted to make sure that there was yeah, I think I think I set up something where like 70 or 80 percent of her her lifestyle is guaranteed, right? She doesn't live an extravagant life or anything, but I that was that was important to me because I know she's a she's a bigger warrior than I am.

SPEAKER_01 12:47

Yeah, so absolutely. I mean, um know thyself, right? That's that's very important in financial planning. So um you some people just they're emotionally um invested in everything, right? So um the the more emotion that you can pull out of their investment decisions and the more guaranteed income you can give someone, um, yeah, it might be just perfect for that situation. Um, you know, other people are you know maybe more risk uh averse, they're they're willing to take more risks, they're okay with market downturns, but understanding your position and understanding how you're going to react to the market is a big step to being able to plan for the future. Yep.

SPEAKER_02 13:29

And with that, you know, let's kind of like you know, sum this up because you know, I I think all these are great points, right? Because it's have visibility, understand what's going on, um, work with people you trust in case something happens to the spouse that you know works on it, you know, that that's been doing this forever. Um you know, and get a plan and build for the unexpected. Absolutely. So as we you know wrap this up, you know, again, we have to, you know, you may or may not be in this situation, ladies, but you know, there there is there is a gender gap, and it's not a perception, right? Right? It's a mathematical, you know, reality, and you have to prepare around it, right? So um taking taking a look at guaranteed income streams, when to turn on social security, um, all that stuff makes a lot of sense.

SPEAKER_01 14:22

Yep. And last thing, um, it's it's great advice, you know. Um if you if you're a woman, whether you're married or single, um, you know, have a have a retirement plan that works on its own for you. So understand the issues out there, understand the income flows, and um, you know, really just um the knowledge is power, you know. We always say that. We're we're big on educating our our clients. So um understanding your retirement plan and the things that it protects um is is ultimately going to help you sleep well at night. Yep.

SPEAKER_02 14:56

So all right, D, take us home, man.

SPEAKER_01 14:58

All right. Well, uh, thanks for listening this week. Um, if you guys have any questions, comments, ideas for the show, hit us up at info at swpconnect.com and we'll talk to you next week.

SPEAKER_00 15:11

The opinions expressed in the podcast are for general informational purposes only and are not intended to provide specific advice or recommendations for any investment. Legal, financial, or tax strategy. It is only intended to provide education about the financial industry. Please consult a qualified professional about your individual needs.