Retirement Weekly: Plan to live to 100 — and other ways women can prepare for the future

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For many of us, planning for aging looks very different than it did for prior generations—and that’s especially true for women.

Some of us live to be over 100. Many are in their 50s when they send their last child off to college. Others retire at 60. Most women have decades left after these types of life events. With the average age of widowhood being 59, as reported by the U.S. Census Bureau, and the growing trend of “gray divorce” – a term used to describe divorcing after the age of 50 – many of us may find ourselves navigating the emotional and financial complexities of aging alone.

Without a blueprint to follow or a partner to lean on, it is critical as women that we adequately prepare for the myriad circumstances that lie ahead—from the good, to the bad, and even the unexpected.

Prepare for the good 

Whether it be an empty nest, retirement, divorce, or widowhood, the many milestones of aging can trigger a sense of emptiness—and with that, a loss of purpose and identity. Yet moments of transition can also present a unique and rewarding opportunity for self-discovery. With lessened demands of a career, children, or a spouse, we may have more time to look inward and discover new meaning. This is an example of “the good” that can come with aging.

An especially impactful conduit for finding new purpose later in life is through engaging with philanthropy. Here are some tips for how to do so:

  • Reflect on the causes you are most passionate about and the values you strive to uphold. Consider creating a charitable giving mission statement to help you think about what you want to accomplish through philanthropy and why. 

  • Take stock of your resources. This includes not only your treasures, but also your time and talents. Once you’ve taken stock, you can determine how much you can afford to give to ensure your philanthropic plan doesn’t undermine your long-term goals.

  • Give wisely. Take the time to learn the most effective ways to fund your charitable activities given your goals. For example, establishing a donor-advised fund has personal and financial advantages, like streamlining your philanthropic interests and income tax benefits. 

Read: 4 ways to get a tax break from your charitable giving

  • Consider how you may want to engage younger family members in your giving strategy. Aligning on causes you’re passionate about creates opportunities to spend meaningful time with younger generations and convey your charitable values.  

Prepare for the bad

One of the biggest challenges women face as we age is the likelihood of a major medical crisis and the resulting cost of healthcare. By the time you reach 65 years old, average annual medical costs are more than $11,000—this is nearly triple the annual average expense for someone in their 20s or 30s. If healthcare costs continue to rise faster than the rate of inflation, your lifetime healthcare costs could exceed $2 million. This sum does not include the cost of long-term care, which can be steep: the median annual cost for a private room in a nursing home facility is $108,408.

Planning for these costs is critical in providing you – and your family members – greater security, control, and peace of mind. Here are some ways that women can prepare for “the bad” that comes with aging:

  • Forecast spending needs and all healthcare costs to age 100 so you don’t risk outspending or outliving your assets.

  • After you retire, work to reduce costs by contesting the Medicare high-income surcharge, which can amount to as much as 3.5 times what most retirees pay. Consider using preferred pharmacies and requesting generics or a therapeutic alternative that covers the same need but costs less under your plan.

  • Explore insurance to help cover long-term care costs in a home or other facility. Given the rising cost for this type of insurance, first identify how much you can afford to cover from your savings and income, and only purchase enough insurance to fill in the gap. Keep in mind: if you have an HSA, you can withdrawal money tax-free to pay a portion of the premiums based on your age.

Prepare for the unexpected

A shocking nine out of 10 women will be solely responsible for their finances during their lifetime. Yet studies show that a majority of us lack the confidence to make critical financial decisions. Adding to that lack of confidence is the fear of outliving our money in retirement. To combat both, it’s important to be proactive.

Take time now to better understand all aspects of your wealth, so if you’re forced to navigate the unexpected alone, you are prepared to take control and make more confident financial decisions. Here’s how to make sure you’re preparing for “the unexpected”:

  • Take inventory of all of the details of your wealth, including what you own (your assets) and what you owe (your debts). 

  • Work to develop a plan that can facilitate resiliency in times of economic stress or emergency, including but not limited to:

    • Having a clear picture of your day-to-day expenses, including any future needs, so you can respond appropriately if required.

    • Ensuring you have an adequate emergency fund to cover surprises.

    • Assessing if you have high debt to pay off.

    • Having a proper mix of assets for your stage in life and an understanding of what can easily be sold if needed.

    • Knowing if you have enough assets to fund how you want to live in retirement (a good assumption is that it takes $1 million for every $40,000 of desired annual income to avoid outliving your money).

As women, it’s important to remember that planning for aging doesn’t need to be a DIY job. In fact, having a team you trust can make it much more successful. Often, this includes a CPA, estate planning attorney, and wealth adviser. When deciding who to have on your team, choose people who talk with you, not at you. Work with experts who speak in plain language and encourage you to ask questions so you can both clearly understand your financial goals and determine what you need to prepare for – and, importantly, make the most of – your golden years.

Steph Wagner is national director of women & wealth at Northern Trust.

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