How can women prepare for a long and financially happy life?

  • 28 September 2020
  • 10 minute read
  • Women, on average, live longer than men but have less saved for retirement

  • Be prepared for the extra expenses of living longer and prioritise saving

  • Make a plan that enables you to be financially secure to enjoy a long and happy retirement.

A longer life…

Women are living longer than men and longer than they used to. In its most recent report on longevity, the UK Office for National Statistics (ONS) said that in 2018 a woman aged 65 can expect to live for another 21 years – almost a third of her life again. For a man it’s 18.6 years – just over a quarter of his life so far.

This expected ripe old age for women has increased dramatically since the ONS first started tracking it. A baby girl born when life expectancy studies began in 1841 would hope to make it to an average age of just 42.

…with less money

Living longer is the good news for women, but we’re going to have to spoil the celebrations with some bad news. As The Independent reported in July, research by the Pension Policy Institute found women at retirement age often have less saved than men. They tend to be set back by a lifetime of lower pay. And as Age UK reports, in March 2019, they are also far more likely to interrupt their working lives by taking time out to care for children, and their parents. This is something that is frequently reported, but what we tend to forget is that women also care for their male partners who are usually older as reported by the ONS in November 2019.

Read more: How can we close the gender pay gap

Read more: How can we escape the gender pension gap

The extra costs of old age

Another spoiler is that living to an older age can be an expensive business. You’re more likely to need medical treatment. According to research published by Nuffield Department of

Population Health in March of this year, nearly two thirds of people admitted to hospital are over 65. You may need to adapt to your changing physical needs by enlisting help for cleaning or gardening, adapting your home, or moving to a more suitable property. Based on data from 2018/19, Which? found care home fees could cost between £539 and £940 a week depending on where you live and whether you need just residential care or nursing and personal care, too.

Read more: Later life care and gender equality

Some insurance costs go up progressively as you get older. As the RAC reported last September, car insurance premiums start climbing from age 70. Health insurance also creeps up in line with our increasing health needs as we age. And for an annual worldwide travel insurance policy, in August 2020 we were quoted almost four times as much as an 80-year-old woman than as a 70-year-old one.

What can women do to be financially prepared for longer lives?

Save as much as you can

The Pensions Policy Institute estimates that to continue drawing some income throughout their retirement, women need to have saved around 5% to 7% more than men to accommodate their longevity. Yet the same report published in July 2019 says that women at retirement age in the UK have, on average, about one third of the private pension savings of men.

With these extra years to pay for, and given that you’re likely to make less money over the course of your life, you’ll need to be especially focused on saving. Keep saving at the front of your mind and do whatever you can. Cover the spectrum of behavioural changes right through from going for that big promotion to cutting back on expensive lattes.

Start as soon as you can: starting right now

Another key way to boost your savings is to start as soon as possible to give your retirement pot more time to grow. More time can equal more money over the longer term.

Save and invest astutely

Commit time and energy to researching the best savings rates, products and tax-efficient vehicles to make the most of your savings. Getting some financial advice could make a big difference.

Tax treatment depends on the individual circumstances of each client and may be subject to change in the future.

Read more: Tactics for tax-efficient investing

Take charge of your own situation

Don’t leave the retirement finances to your partner. Make the effort to be informed about everything that’s in place – pensions, insurance, savings, shares, businesses, property and other assets – particularly as your partner is likely to die before you. This knowledge can also help you receive your fair share if you decide to divorce, and might even give you more confidence to end a relationship if you feel you need to.

Carry on making money

If you are short on funds to see you through the long haul, consider working longer or part-time; what about semi-retirement, freelance, consultancy or seasonal work? Be creative. Can you turn a hobby into a money-spinner? Saga Magazine has a huge range of suggestions for making money in ‘retirement’ including running a B&B and e-bay selling. By matching your money-making projects to your best skills and interests, you may also find it a great way to stay active and motivated.

Read more: Are you ready to jack it all in?

Make your own needs a priority

You may want to help family members with your time and money, but keep in mind you’re likely to have many years of retirement to fund, so think about this carefully. Plan to make what resources you do have last as long as you do. You may want to ask a financial adviser for help with this, perhaps just so you know how much you can afford to give away without compromising your own lifestyle.

Plan now to enjoy a long life

A long life is a great privilege.

But as Fidelity International reported in Jan 2020, almost one quarter of women felt anxious about their retirement planning, and one in eight felt overwhelmed by the topic.

If you are anxious about your financial wellbeing, being aware of your situation is the first step towards building yourself a more confident future. Once you have a better understanding of the challenges you face, you can start taking control of the situation and becoming master of your own destiny.

By taking control with some proactive planning, you can hopefully create the financial security that can bring peace of mind and the freedom of choice in how you want to live your third age.

It could make the difference between enjoying your later years and living with anxiety.

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In preparing this article we may have used third party sources which we believe to be true and accurate as at the date of writing. However, we can give no assurances or warranty regarding the accuracy, currency or applicability of any of the content in relation to specific situations and particular circumstances.

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