It may sound offensive to say it, but compared with men, women have a math problem. At least that’s the conclusion we found in this insightful article that appeared recently on the Reuters website. By “math problem” we don’t mean that women aren’t as good at arithmetic or geometry as their male counterparts. Instead the challenge many women face compared to most men involves retirement: on average, women retire two years earlier but live five years longer. There are several reasons for this disparity, but when you combine these demographic factors with the reality that there is a huge lifetime wage gap between the average working male and the average working female, the result spells trouble for many women planning for their financial future.

Becoming a Caregiver

One of the biggest challenges women often encounter is the need to leave their jobs earlier than planned to take care of someone else. “When it comes to early retirement, which most define as before 65,” says the Reuters article, “a study from Fidelity released Thursday found that the top reason women leave the workforce early is because of a health concern. This health matter typically relates to a spouse, but also sometimes to elderly parents or even grandchildren.”  According to many studies at least two-thirds of unpaid caregivers in our society are women. One example from the article was a woman who stopped working when she was 63 to care for her husband until he died of lung cancer. “Rather than return to the workforce, she shifted to caring for her grandchildren so her daughter could work,” Reuters reports. This is an all-too-common scenario.

The Reuters article cites a just-released Merrill Lynch study that demonstrates how many women are already far behind most men even before the need to serve as a caregiver arises. “One of the major reasons women save less than men,” reports Merrill Lunch, “is that they spend 44 percent of their adult lives out of the workforce, compared to just 28 percent for men.” This huge discrepancy contributes to a cumulative wage gap that Merrill Lynch calculates at potentially $1 million in lifetime earnings – a gap that means many women enter their pre-retirement years far behind not only in savings but also in Social Security earnings. (We were also surprised to read in the Reuters article that women spend at least 10 percent more on healthcare after age 65 – about $147,000 average compared with $133,000 for a man. That cash has to come from somewhere.)

Solution: Share the Load, Stay on the Job

Reuters offers some pretty basic recommendations, so we’ll share those with you and then explain our view here at AgingOptions of what other steps you need to be taking. The first suggestion is, if at all possible, to keep working – and if you have left the workforce, try to get back into the job market, even part time. “Working women need think about the long-term impact of stopping work,” Reuters states. “At the very least, try to keep one toe in the workforce.” The impact of part time work, financially and emotionally, is extremely beneficial, and starting something new even at an older age can inspire confidence and contribute to a sense of personal reinvention.

The second suggestion the Reuters article offers involves healthcare for a loved one. If you as a woman nearing retirement age have found yourself unwillingly becoming the sole caretaker for an aging parent or loved one, it may be time to call in some reinforcements. “Before one person in a family stops working to become a caretaker,” says the article, some planners suggest “polling everyone involved (siblings, adult children, etc.) to see if the care can be divided without anyone having to stop work. The group can pool resources to pay for a caregiver instead, too.” This can be an excellent topic for a well-planned family conference, something with which the professionals at AgingOptions can assist you.

Perhaps the strongest recommendation from Reuters is the third one: women should do whatever it takes to avoid taking Social Security or other pensions early. One financial planner quoted in the article says women need to do “anything else but” taking early benefits, even if it means drawing down other accounts first. “With Social Security,” says Reuters, “claiming at any age prior to 70 chips away at benefits. Many private pensions also have age triggers.” If you still own your home or have decent equity, consider selling and downsizing. Another potentially good option is a reverse mortgage line of credit, which, depending on your circumstances, can literally buy you some time until it’s prudent to start Social Security.

More Than Money

In our view, the Reuters author is right to point out the issue – but we find their advice inadequate and one-dimensional, focusing (as so often happens) on finances to the exclusion of practically everything else. The absolutely essential step everyone must take before retirement, especially women facing this stage of life more or less on their own, is to create a proper plan that puts all the different pieces of retirement living together into one seamless strategy. That way your money challenges don’t turn into medical challenges – which can then become housing challenges – which can quickly turn into legal challenges – all of which will inevitably embroil your loved ones in a full-blown family challenge. To avoid this unhappy outcome, what you need is an AgingOptions LifePlan in which financial, medical, housing, legal and family aspects of retirement work together in harmony.

Please accept our invitation to find out more, without cost or obligation. Join Rajiv Nagaich at an upcoming LifePlanning Seminar. You’ll find all the currently scheduled seminars here on our Live Events page. Then you can sign up online for the seminar of your choice or call us for assistance. Women, men, married or single, retired or working – an AgingOptions LifePlanning Seminar is the best investment of a few hours of your time that you will ever make. Age on!

(originally reported at www.reuters.com)

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