By Wendy Mihm | February 19, 2011
Do women need their own retirement strategy?
Let’s look at some facts. On average, women live longer than men, and women tend to think and communicate about money differently than men do.
Health Care Expenses Eat Away at Retirement Savings
One of the largest expense categories most retirees face is health care. Many people think that, once they hit the age of 65, Medicare will cover their health care costs, but this is simply not the case, especially if brand name prescription drugs are in the picture. Medicare does cover some expenses, but it leaves many gaps in coverage. That’s why there is a whole sub-segment of the health insurance industry that sells senior supplemental plans like “Blue Cross “Medigap” plans —to fill in the gaps left by Medicare.
According to Gail Marksjarvis, a finance contributor with the Chicago Tribune, a man retiring today at age 65 would need in the range of $134,000 to $378,000 in savings, just to cover health care expenses.
Now let’s extrapolate that out to a woman retiring today – who will presumably live about 5 years longer than the average man we just talked about. That would be about $164,000 to $450,000. Just for health care.
Now imagine the amount of savings you’ll need if you also want to be able to afford other ordinary living expenses, such as housing (even though your mortgage may be paid off by then, you’ll still need to pay for things like taxes, maintenance and homeowners insurance), meals, car expenses, travel and leisure costs, and all those other expenses that add up to make life enjoyable.
Women Tend To Think About Money Differently Than Men Do
Now that I’ve scared the bejeezus out of you, what should you do about it? Well, let’s look at that next point from above: women often tend to think and communicate about money differently than men do.
I met a woman at a conference recently who is a financial adviser, and she told me about how women always seem relieved to come to her office to talk to another woman about money.
“They don’t want to out-compete anyone with their money. They don’t care about out-performing the broker down the block or even the S&P 500, for that matter. They come to me with very straightforward goals” she says. “They’ll tell me something like ‘I want to send my daughters to college… if they get into really good schools I don’t want to have to say no’ or ‘’My husband and I want to move our family into a bigger house in a neighborhood with great schools. How can we do that?’”
I can relate to that so well it’s almost scary, and maybe you can too.
So this is what I would advise you to do: think and communicate about money like you naturally would: in terms of a straightforward goal. Forget about statistics. Forget about stock tickers. Don’t panic. Get informed about how much you need. Visit our article called How Much Will I Need to Retire? and play around with the calculator in the link. Talk with your spouse. Max out your 401ks together. Visit our other article called Get Started Investing for more ideas there.
Then set a straightforward goal by putting a number in your head—or even better, put it down in writing—and go after it!
It doesn’t matter if it’s not the perfect number. There is no perfect number! What matters is that you and your partner start going after a retirement goal and that you get started right away.
Use the way you naturally think and communicate about money as a woman to tailor your retirement strategy and you just might retire richer.