Issues In Planning

Women And The Longevity Risk

Recognizing a need for greater diligence

by Douglas Dubitsky

Mr. Dubitsky is vice president, Retirement Solutions at Guardian. He is responsible for directing Guardian’s retirement product and service offerings. Under his leadership, Guardian is ushering in a new generation of retirement products designed to meet the evolving needs of what the small to mid-size business owner is looking for in 401(k) and other qualified plan solutions and individuals who are looking for guaranteed retirement income. Mr. Dubitsky brings more than 15 years of cross-functional experience and a proven track record in retail and wholesale distribution in the insurance and financial services industry to his role at Guardian. Reprinted with permission. Visit

The likelihood that you will outlive your money is known as “longevity risk.” While everyone needs to be diligent in making sure their financial resources last as long as they do, women face a higher longevity risk for several reasons.

More candles on the birthday cake – American women outlive men by five years on average1 putting increased strain on their financial resources for retirement.

Fewer dollars in the paycheck – Despite efforts to create pay equity in the workplace, women still earn just 80 cents for every dollar that men earn, according to the U.S. Department of Labor (2011). Because they earn less, their ability to save is compromised.

The caregiver penalty – Many women take some time off from their careers to raise a family and/or care for elderly parents. This reduces the time they contribute to a retirement plan or receive an employer’s contribution. It also affects the size of their Social Security benefits.

Lack of pension – Women are more likely to work in part-time jobs that don’t qualify for pension coverage.

Many women take some time off from their careers to raise a family and/or care for elderly parents. This reduces the time they contribute to a retirement plan or receive an employer’s contribution

New Financial Habits

For all of these reasons, women need to make an extra effort to save and accumulate more money so that their retirement funds last longer. Financial habits that can help women reduce their “longevity risk” include:

  • Think about your short-term and long-term goals and create a financial plan to reach each one. You don’t need a long or formal statement, just a written plan of action.
  • Maintain a healthy balance sheet and if you accumulate debt, especially high-interest rate credit card debt, pay it off as soon as you can.
  • Buy only what you can afford now. One effective approach is to track all your spending for a month, evaluate which expenses are truly necessary, and then cut out what isn’t needed.
  • Build long-term financial resources for retirement through regular savings. Start today and you can begin to put the power of compounding on your side.
  • Grow your net worth by making it your top priority to pay off debt and save for your retirement throughout your working years. Over time, your net worth—your assets minus your liabilities—will grow.
  • Conduct an annual financial check-up with a particular focus on your investments by evaluating how well they perform compared with similar investments. Maintain an appropriate mix of investments throughout your life.
  • Keep your will up-to-date and consider life, health and disability insurance to protect your loved ones should something happen to you. Also, investigate long-term care insurance to protect your assets and spare your loved ones from having to be your full-time caregivers.
  • Limit annual withdrawals to 4% of your initial retirement account balance when you retire. Then adjust for the rate of inflation. This will give your nest egg a better chance of lasting 30 years or longer.
  • Consider purchasing a fixed annuity to create a lifetime stream of income. Calculate your fixed monthly costs. Subtract your Social Security benefits. Then, purchase an annuity to cover the difference.




1 World Health Organization, World Health Statistics, 2014
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