Retired women and pre-retired women alike fail to plan long-term for their retirement, according to a study by the Society of Actuaries (SOA). Offering an actuarial perspective on ways to address these concerns, the report, titled “The Impact of Retirement Risk on Women,” uses findings from the “2009 Risks and Process of Retirement Survey Report” to identify specific concerns for women and retirement.
Half of women at age 65 will live another 20 years or more, says the SOA; of its survey respondents, 92% of those who are retired, and 89% of those who are in “pre-retirement,” fail to plan adequately for that 20-year span. The report offers an actuarial perspective on techniques to address this failure to plan.
Olivia S. Mitchell, professor of insurance and risk management at The Wharton School, University of Pennsylvania, says that while she cannot comment on the accuracy of the percentages mentioned above, people in general have very low financial literacy. They also, according to a working paper on Social Security coauthored by Mitchell and three others, have a low understanding of their own longevity. Most are more optimistic about how long they will live than actuarial tables suggest.
That said, it was perhaps all the more surprising that women, who live longer than men, should fail so spectacularly at providing for what could be a substantial period of time after retirement. But most Americans—not just women, according to Mitchell—don’t plan for retirement. Many don’t even try to plan.
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The risks to women in retirement from an actuarial standpoint are considerably different from those to men, according to the SOA.
Five key issues that women face and fail to adequately plan for include:
- Outliving their assets;
- Potential for chronic disability, either mental or physical;
- Cost of health care and treatment; and
- Economic factors.
Because of their longer lifespans, the SOA says, the effects of some of these are magnified for women. The cost, for instance, of lifetime long-term care averages $29,000 for men, but $82,000