Women have made incredible strides over the past 50 years, but retirement planning remains a challenge. From the gender pay gap to longer life expectancies, these factors fuel financial fears — and planning is key to overcoming them.
In this “Financially Savvy Female” column, we’re breaking down the top retirement fears women face, and offering practical, expert-backed ways to plan around them.
Outliving Savings
According to a survey conducted by the Transamerica Institute for Retirement Studies, working women’s greatest retirement fear is outliving their savings and investments, with 44% citing this as a worry.
“Given their savings rates, many women should be concerned about the potential of outliving their savings in retirement,” said Catherine Collinson, CEO of the Transamerica Institute. “However, they can take steps to help mitigate that risk. One of the most important things women can do is take a financial look in the mirror and really understand where they stand in terms of their current financial situation.”
Collinson recommended tracking your income and expenses and creating a budget that allows for long-term retirement savings based on your projected needs.
Learn More: The Realistic Minimum Retirement Savings Needed, According to Experts
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Social Security Cuts
Many women are also worried about the future of Social Security, with 43% fearing that Social Security will be reduced or even cease to exist during their retirements.
“Everyone should be closely following the developments of Social Security,” Collinson said. “The trust fund is estimated to be depleted within the next 10 years, and if reforms are not implemented, then there would be an across-the-board cut in benefits. That’s not the same as ceasing to exist. However, a reduction in benefits, if it’s something that you’re counting on, could be problematic for you.”
One of the best ways to mitigate potential cuts is to be strategic about when you claim your benefits — waiting to claim until age 70 will significantly increase your benefit amount compared to claiming at age 62. Next, create a plan for both the best- and worst-case scenarios.
“If there are no reforms implemented, there would be an across-the-board reduction of around 20% every year,” Collinson said. “If you’re expecting $2,000 a month from Social Security and there’s a 20% cut, that would mean you would only get $1,600 a month. It’s not likely that that will ever materialize, but it’s one way to think about it in your planning.”
Rising Long-Term Care Costs
Women also have a lot of fears around needing long-term care and its potential costs — 43% fear declining health that requires long-term care, and 31% are worried about how to afford possible long-term care costs.
“First, do your homework — find out how much long-term care costs in your area,” Collinson said. “Gain an understanding of what those costs potentially look like and the different types of options available.”
Once you are aware of potential care costs, you can start saving money specifically to meet this need. It’s also wise to look into what Medicaid may cover, if you are eligible for it.
For younger women who have more time ahead of them, Collinson recommended taking advantage of health savings accounts.
“That account can grow over time all the way to and through retirement,” she said. “When it reaches a certain balance level, you can even invest those funds, and it offers a triple tax advantage: It is tax-deferred income, withdrawals for qualified medical expenses are tax-free, and if you invest those funds, the inside growth of those investments is also not taxable.”
An HSA can help fund your long-term care if you need it.
Affordable Healthcare and Housing
Alarmingly, many women are worried about being able to cover essential costs in retirement — 30% are concerned about a lack of access to affordable healthcare, and 28% are worried about a lack of affordable housing.
When it comes to healthcare, you first need to understand your Medicare eligibility, and then what your premiums would look like.
“Do your homework — and expect it to be difficult,” Collinson said. “The Medicare system [has many] different parts involved, [but understanding it] can really help you plan for healthcare expenses in retirement. The big cautionary note is that the cheapest coverage isn’t always the best [option] — the best coverage is what’s right for you and your situation.”
For housing, look into the types of affordable housing programs that are available to seniors and what the requirements are.
“There’s a shortage, and the waiting lists are long, so the sooner you know about whether you’re eligible to be able to live in one of those communities, and you’re nearing the age, get on a waiting list,” Collinson said.
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This article originally appeared on GOBankingRates.com: 4 Top Retirement Fears Women Face — and How Smart Planning Helps
