The New Finance of Longevity

Women’s Health Care Costs in Retirement Projected to be $200,000 More than Men’s

Small steps can make a big difference in bridging the Women’s Longevity Gap

A new study from HealthView Services highlights some stark realities for women in retirement. Access the report here.

September 29, 2020 — DANVERS, Mass.–(BUSINESS WIRE)–Health care costs are a major expense during the Women’s Longevity Gap, the period in which a woman will need to cover expenses single-handedly after the death of a male spouse or partner, according to recent data from HealthView Services, the nation’s leading provider of health care cost projection software. The company estimates that in retirement an average, healthy 43-year-old woman will face nearly $200,000 more in health insurance premiums than her husband.

The company, which provides software for personalized health care cost projections to financial professionals, urges women and couples to start planning early to address the “longevity gap.”

HealthView Services encourages thoughtful, personalized planning for the disparities of age, income, and life expectancy that commonly exist among male/female couples. Recommendations include:

  • Start saving early. It’s not unusual for a woman to outlive a male spouse by a decade or more in which she alone will need to cover additional expenses. For a couple now in their mid-forties, the woman would need to save more than her spouse to cover health care costs in retirement, but not by much: just $5,400 invested today will bridge the longevity gap.
  • Make financial plans based on each spouse’s actuarial longevity and age differences; take advantage of specialized tools that deliver personal health care cost projections to inform the overall savings strategy.
  • Approach retirement planning as a team sport, with a financial advisor as your coach. Factor in how one spouse’s retirement income decisions will affect the other’s income, benefits and health care expenses as a surviving spouse. Plan now – and together – to address Medicare surcharges, as well as Social Security income benefits, which will affect both spouses no matter how long they live.

“Following these steps, women and their financial advisors can mitigate – and potentially even eliminate – the longevity gap and the other challenges that are common among female retirees,” said Ron Mastrogiovanni, CEO of HealthView Services. “.”

Excerpts from the Study Addressing The Women’s Longevity Gap

Women face a number of unique challenges in retirement, largely stemming from lower working salaries and greater longevity relative to men. The conventional wisdom about how to deal with these challenges has been sound, if extremely broad: Women should plan to save more in order to make up for any retirement shortfall they experience.

However, there are more finely honed ways to both diagnose the extent of the problem and offer effective planning solutions. First, the problem: The financial and longevity disparities between women and men create a unique challenge that we describe as the “women’s longevity gap.” Given women’s longer life spans and the fact that women in opposite-sex marriages tend to marry men who are older than they are, women often must be prepared to cover their expenses single-handedly for more than four years after their husbands die. Compounding the problem, this longevity gap occurs during a phase of life when healthcare expenses will be at their highest.

Financial advisors with the right tools and data at their fingertips have the power to help their female clients close that longevity gap...

Financial advisors have an opportunity to help female clients and their spouses plan more strategically to address women’s longevity gap. That includes adopting specific strategies to address the financial toll of end-of-life years, when medical costs often mount. Advisors also can use specialized tools to provide women with highly personalized advice that factors in their age, income, savings, health conditions, marital status and expected income from Social Security and/or pensions.

Make Financial Plans Based On Actual Longevity

A healthy 65-year-old woman has an additional life expectancy of 24 years—meaning she is expected to live to age 89. That compares to a life expectancy of 87 for a healthy 65-year-old man.And, of course, these figures are merely averages: HealthView Services data indicates that a given client may live much longer, or much shorter, than the average, largely depending on how well, or poorly, their health conditions are managed as they age. Typically, with like conditions, women will live 2-4 years longer than their husbands.

To address these disparities, some advisors assume that clients will live to age 90, 95 or even 100. Others take family history into account—for instance, adding five years to a financial plan if a client’s parent lived into their 90s. While these approaches are well-meaning—no one wants to create a plan that over-estimates longevity and limits annual income allowed—they may be based on unfounded assumptions.

For instance, researchers have found that hereditary/DNA factors account for just 7% of an individual’s life span—likely not enough to influence a massive shift in that person’s financial plan. Still, financial professionals may choose to add a number of years as a “buffer” to actuarial longevity estimates in case a client outlives their predicted life expectancy.

Start Social Security Optimization Planning Today (With A Focus On Survivor Benefits)

Early planning can also make a difference when it comes to Social Security—the largest source of income for U.S. retirees. Social Security is designed to replace 40% of pre-retirement earnings, and benefits never expire; they last as long as the client does. As a result, women on average collect more years of benefits than men do, making it even more critical that they maximize those benefits.

Advisors should encourage couples to choose filing strategies that maximize household income, rather than looking at each spouse separately. The likelihood that many women will outlive their husbands makes this approach particularly important. For instance, a man who claims Social Security at age 70 could provide his spouse with a survivor benefit that is roughly 50% larger than if he had claimed at age 62. That increase can make a substantial difference in his wife’s income if he passes away first.

Access the report here.




About HealthView Services
Founded in 2008, HealthView Services is the nation’s leading provider of healthcare cost projection software, built on a dataset of 530 million health care claims. Its portfolio of retirement healthcare planning applications centered on personalized longevity estimates and individual health care cost projections is used by advisors, financial institutions, employers and consumers to create comprehensive, reliable health cost projections for 33 million users annually. Visit us to know more: