More women are spending more time living alone. And that’s having a big impact on retirement planning.
A new study from the Center for Retirement Research at Boston College shows that in each of four age cohorts studied, the percentage of adult years that women spent married has dropped dramatically.
The study looked at "woman years," the years over age 20, and the amount of those years that are spent in marriage. Not surprisingly, the oldest cohort spent about 72 percent of their woman years in marriage. But younger women, defined as "mid-baby boomers," spent only 52 percent of their adult years in marriage. And the figures show a continued downward trend.
The study says the reasons are three-fold: Fewer women get married; when they do marry, they get married later; and more women end up divorced. You likely have seen this for yourself among your family, friends and acquaintances.
The message for women: Don’t count on anyone else for your retirement security.
There’s another statistic that impacts women’s retirement planning. Women, on average, live longer than men. According to the Social Security Administration’s actuarial tables, a 60-year-old male has a life expectancy of 21.55 more years, while a woman of the same age can expect to live another 24.56 years.
Women who outlive their spouses should think about health care expenses. While it’s notoriously difficult to predict future medical expenses (and what programs will be available to pay for them), one study expects that a 65-year-old man who retires this year will have about $200,000 in health care expenses, while a woman will spend about $35,000 more than that over her retirement lifetime.
And that doesn’t include the cost of long-term care — support not covered by Medicare or supplements, except for a short period after you’ve been in a hospital. Women living longer are likely to be women living alone. Single women need to plan right now for the possibility of requiring long-term help.
I’m not suggesting marriage as a solution, because you could wind up being the "nurse" and still find yourself alone. But there are some steps to consider now, while you have the flexibility to plan.
Save more money: Time leverages money. Even a small additional amount saved every year in your company retirement plan or IRA can make a big difference in the long run.
Open a health savings account: If your employer provides a qualified high-deductible health care plan, you may be eligible to open an HSA. It allows you to save on a tax-free basis for costs you might encounter after retirement. You don’t have to use the funds for medical expenses now. You can buy a high-deductible insurance plan in combination with an HSA at www.eHealth.com.
Consider long-term care insurance: Yes, the premiums could rise as you age, making the cost unaffordable. But look into the policies that combine with life insurance and fix your annual premium. If you don’t spend the money on care, your heirs will get the death benefit. Or you can borrow out some cash for unexpected expenses, diminishing the amount available for care.
Plan with friends: Many of your single female friends likely are facing the same challenges that you are. Buy a retirement home together or get apartments next door to each other. Or let a friend move into your empty-nest second bedroom and share costs. At the very least, you’ll have someone to call in the middle of the night in an emergency.
There’s a lot to be said for being 60 and single. In fact, there’s even a website devoted to the proposition that life is better than ever for older single women, Sixtyandme.com. It points with pride to the fact that 37 percent of women over 65 live by themselves — and enjoy it.
But costs add up the longer you live, so it pays to plan. And that’s The Savage Truth.
Terry Savage is a registered investment adviser and the author of four best-selling books, including "The Savage Truth on Money." She responds to questions on her blog at TerrySavage.com.