Why Women Have a Greater Risk of Running Out of Money Than Men

By Ed Vargo

Most would agree that a financial plan tailored to your life goals, current financial situation, and feelings about risk is a proven way to set yourself up for financial success. But the stakes are even higher for women, who often face income challenges in retirement that men don’t.

If you’re shaking your head thinking, “Ugh, what now?!” you have good reason. Only 31% of women are actively saving toward retirement compared to 44% of men. ⁽¹⁾ This means that 69% of women are at risk of not being able to retire on time or running out of money when they do. ⁽²⁾ On top of that, nearly 30% of retired women reported that financial hardships increased throughout retirement. ⁽³⁾

The struggle is real but at Burning River Advisory Group (BRAG), we know these dire statistics don’t have to be your reality. We’ve identified 4 unique income challenges women face in retirement and how working within our Servant Money Method™ can help you overcome them.

1. Life Expectancy

Unfortunately, the income challenges women face start at birth due to longer life expectancies. At birth, women are expected to live until 81, while men are expected to live until 76. ⁽⁴⁾ What’s more, a woman who is 60 now has a life expectancy of 24.79 years, meaning she would likely live to age 84.79. ⁽⁵⁾

This difference between men’s and women’s longevity may not seem like much. After all, what’s an extra 5-8 years? Well, when it comes to creating income that lasts a lifetime, those extra years could make or break you. Not to mention that 50% of women will live beyond their life expectancy!

These numbers tell us it’s not enough for women to rely on traditional retirement models that lump men and women into the same group. For instance, on average, men don’t have to worry about outliving their spouses. Women do. In a survey of men and women 75 and older, 54% of women were currently widowed as opposed to only 20% of men. ⁽⁶⁾

It’s critical your financial plan is tailored to your unique financial situation. Free internet retirement calculators are great for a quick look, but you shouldn’t base your retirement readiness on them, especially if you’re a woman.

2. Healthcare Costs

Healthcare represents one of the largest expenses in retirement, but even more so for women. According to a study conducted by HealthView Services, a healthy 43-year-old woman will face nearly $200,000 more in health insurance premiums than her husband in retirement. ⁽⁷⁾

Not only that, but women can also expect to pay more for long-term care insurance and services, with premiums estimated at $3,700 per year for women and $2,2220 for men. ⁽⁸⁾ If you go to an assisted living facility or nursing home and take a quick look around you, you’ll immediately know why: it’s filled with older women.

At BRAG, we understand women’s healthcare needs. We’ll help you navigate the alphabet-soup quagmire of Medicare and Medicare Supplement plans, how long-term care insurance works and if it’s right for you, and how to protect your assets from being decimated by runaway healthcare expenses.

3. Income & Workforce Limitations

Even in 2022, there is still an income disparity between men and women. For every dollar earned by men, women earn $0.83, ⁽⁹⁾ and average annual Social Security payments are about $4,000 less per year for women. ⁽¹⁰⁾ The result is women are far more likely than men to live below the poverty line during their retirement years. ⁽¹¹⁾

This issue is exacerbated by the fact that women spend more time out of the workforce to care for children or other family members. Not to mention the pandemic led to a disproportionate number of women stepping out of the workforce with many yet to return. ⁽¹²⁾

Whether you retired early or left your job to take care of the kids, not working affects every aspect of a woman’s long-term financial plan, including earnings power, Social Security benefits, and the amount saved in retirement plans. Further, women are less likely to have long-term investment vehicles in their own name which can have a significant impact on their ability to manage future expenses, ⁽¹³⁾ especially if they get divorced or become a widow.

Knowing these financial landmines exist is the first step to overcoming them. The next is to develop a game plan that addresses and overcomes them. But it doesn’t just happen. Finding a financial partner who can help you build and implement your financial life plan can be the difference between success and failure.

4. Lack of Planning

The Financial Health Network reports that only 42% of women feel confident they will have enough money to live on in retirement, and 35% of non-retired women ages 50-64 report having no personal retirement savings whatsoever. ⁽¹⁴⁾

Whether it is a lack of interest or a lack of confidence that leads women to avoid engaging with their finances, it is a trend that needs to stop. Too many women still default to the men in their lives (spouse, father, brother) for financial advice, often because he’s more interested in finances than she is. Unfortunately, greater interest doesn’t equate to greater competency. Men are not born with a financial knowledge gene!

On the contrary, some studies have shown that when women get involved in their finances and investments, they often do a better job than men, with the research suggesting the difference in returns is as much as 1%! ⁽¹⁵⁾

That said, this isn’t about pitting women against men. It’s about creating an appropriate level of financial engagement. Dividing household duties is natural and works for simple things like cutting the grass or cleaning the kitchen. But it doesn’t work for complex items like retirement planning, establishing spending and saving guidelines, and how much debt to take on.

It is our strong belief you should NEVER turn over the financial decision-making to someone else in your life. Not to your spouse, your father, or your financial advisor.

At BRAG, our mission is to empower women to have the confidence to take control of their financial lives and be appropriately engaged with their money. The good news? It doesn’t require you to love money, be a math whiz, or make this your life’s work. And you don’t have to do it alone.

Do You Have Questions About Your Retirement?

Yes, the struggle is real, but the future is still bright. At Burning River Advisory Group, we know the challenges women face and have dedicated our careers to helping women become strong with their money. If you are nearing retirement and worried about your financial situation or if you just want a second set of eyes to look at your current plan, please reach out today. Call 216-404-2420 or email evargo@burningriverag.com to find out how we can help.

About Ed

As Founder and CEO of Burning River Advisory Group (BRAG) and enlightenHer, Ed’s mission is to help women take control of their money and to live their version of a meaningful life. His life experience testifies to how money can be the best of servants or the worst of masters, and why each of us needs to be in control of our money.

As the father of five daughters, Ed is raising his girls to be strong, independent, formidable women. He believes being knowledgeable and in control of their money is essential. Ed is committed to teaching them how to be empowered by money, not weakened by it.

Ed takes this mindset into his work. He’s passionate about helping women take control of their financial lives once and for all. He created the Servant Money Method (SMM)^TM, a proprietary financial life planning process designed to give women the ability to live a meaningful life without a money anvil hanging over their heads.

Whether that’s exiting the rat race with integrity intact, starting over after a difficult divorce, moving closer to be near the grandbabies, or simply sleeping better at night knowing they’re not going to outlive their money, the SMM^TMtakes the financial “heavy lifting” off clients’ plates so they can focus on what matters most: pursuing a meaningful life.

Ed’s clients know their success is at the forefront of all he does, and he works tirelessly to advocate for them. He strives to be their “first call”—the person they turn to when they need objective advice, accurate information, or a calm and experienced voice to help them through tough times.

Ed believes we should use our money to make a life instead of using our life to make money. His values-based mission allows his clients to do just that.

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⁽¹⁾ https://www.tiaa.org/public/about-tiaa/news-press/press-releases/2022/03-21-gender-divide

⁽²⁾ https://www.tiaa.org/public/about-tiaa/news-press/press-releases/2022/03-21-gender-divide

⁽³⁾ https://www.nytimes.com/2021/12/26/health/older-women-financial-hardship-retirement.html

⁽⁴⁾ https://worldpopulationreview.com/state-rankings/life-expectancy-by-state

⁽⁵⁾ https://www.ssa.gov/oact/STATS/table4c6.html

⁽⁶⁾ https://www.census.gov/library/stories/2021/04/love-and-loss-among-older-adults.html

⁽⁷⁾ https://www.businesswire.com/news/home/20200929005942/en/Women’s-Health-Care-Costs-in-Retirement-Projected-to-be-200000-More-than-Men’s

⁽⁸⁾ https://smartasset.com/insurance/how-much-does-long-term-care-insurance-cost

⁽⁹⁾ https://www.compa.as/blog/wage-gap-statistics

⁽¹⁰⁾ https://www.timesrecordnews.com/story/money/personalfinance/retirement/2022/06/22/the-startling-truth-behind-how-much-more-men-get-from-social-security-than-women/50398203/

⁽¹¹⁾ https://sgp.fas.org/crs/misc/R45791.pdf