The Longevity Risk of Women

“Longevity risk” is known as the probability that you’ll live longer than your money.  Although there’s need for everybody to be conscientious in ensuring their sources of income last all through their lifetime, women are exposed to a higher longevity risk for lots of reasons including:

  • Longer lives

    – Studies have shown that on the average, American women live longer than men by up to 5 years thereby further straining their sources of income for retirement.

  • Earn less

    – In spite of efforts to ensure equal pay in the workplace, women, unfortunately, continue to earn only 80 cents for each dollar earned by men, as stated by the United States Department of Labor in 2011. Their savings ability is compromised since they earn less.

  • The caregiver consequence

    – Lots of women take time off work to care for their elderly parents or to raise a family. This further decreases their retirement plan contribution period or period of receiving the contribution of an employer. In addition, their Social Security benefits is affected.

  • No pension

    – Most part-time jobs don’t offer pension coverage to employees and women are more likely to work in such jobs.

For the aforementioned reasons, women must go an extra mile to ensure they put aside and build up more funds so that their retirement resources can last longer. Here are some tips on financial habits that can assist women in reducing their longevity risk:

Goal setting:

Create both long-term and short-term goals and have a financial plan on how to achieve each of them. It doesn’t necessarily need to be something lengthy or official, just an action plan written down.

Healthy balance sheet:

Make sure you keep a healthy balance sheet and if you have accumulated debt, particularly credit card debt with high-interest rate, settle it as soon as possible.

Spend prudently:

Ensure you purchase only the things you have the funds for currently. An effective method is to keep track of all your spending in a month, assess which of your expenditures are really essential, and do away with what’s not.

Long-term income sources:

Endeavour to save regularly so as to build long-term financial resources for retirement. Begin today and leverage the power of compound interest.

Grow your net worth:

This can be achieved by prioritizing paying off your debt and saving for retirement all through your years of working. Your net worth, which is your assets excluding your liabilities, will grow over time.

Annual financial check-up:

Conduct a financial check-up annually, paying particular attention to your investments. Evaluate their performance by comparing with similar investments. Have the right mix of investments all through your lifetime.

Update your will:

Be sure to keep an updated will always and think about disability, health and life insurance to care for your loved ones should any harm befall you. In addition, look into long-term care insurance to shield your assets and avoid turning your loved ones into full-time caregivers.

Limit yearly withdrawals:

In retirement, your yearly renewals should be restricted to 4% of your initial retirement account balance. Then make some adjustments to factor in inflation rate. This provides your savings with a better likelihood of lasting thirty years or more.

Fixed annuity:

Think about buying a fixed annuity in order to create an income stream that will last a lifetime. Work out your fixed monthly charges, take away your Social Security benefits and then buy an annuity to make up for the difference.


  1. World Health Organization, World Health Statistics, 2015

Written by 3rd Independent Party

2017-42307  Exp. 10/17

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