Women and Retirement Risk: What Should Plan Sponsors Know?

Anna M. Rappaport, FSA, MAAA, a fellow of the Society of Actuaries (SOA) and member of the American Academy of Actuaries, suggests actions to help women better prepare for retirement.

As the Baby Boomers are reaching retirement age, there are growing concerns that many Americans are inadequately prepared for retirement. Women face the same lifetime risks as men: outliving their assets, facing a long-term-care event, getting disabled earlier in life, saving too little, investing insufficiently, or suffering a loss due to a scam. But because they have different life paths, many women face greater challenges and are less prepared for the period late in life. 

There are many reasons for women’s and men’s different retirement experiences:

  • Women live longer, and the population at the highest ages is primarily female. Therefore, their retirement funds need to last longer than men’s, and older women are more likely to run out of money.
  • A high percentage of older women are widows, and some spend many years as widows. If their spouse was sick prior to death, that may mean assets were used for the spouse’s medical care, and less is left for the widow.
  • Overall, women have fewer years of paid work and lower career earnings. In the allocation of family responsibilities, women often assume more of them, at home and in caregiver roles over many life stages. However, they may spend their later years alone, and they need to plan for their future security.
  • On a societal basis, women experience higher long-term care costs. They are more likely to need help with the activities of daily living later in life. But they will likely be alone, whether widowed, never married or divorced. Therefore, they are less likely to have a family caregiver.
  • Mothers are the first line of help for their children and are extremely devoted to them.
  • Many women have trouble thinking about their needs first, or at the same time others have needs, with the result that their needs become secondary or may even be forgotten for long periods of time.

Lessons Learned From Retirees  

The Society of Actuaries Committee on Post-Retirement Needs and Risks (CPRNR) has recently conducted focus groups with financially resource-constrained retirees retired for more than 15 years as well as those retired more recently. Focus groups were conducted separately by gender. The CPRNR has also surveyed retirees and near-retirees with regard to post-retirement risks, with the surveys conducted every two years starting in 2001. Some of the findings from this work include:

  • Gaps in knowledge and misperceptions are very common.
  • People commonly deal with things as they happen, rather than anticipating and planning for financial shocks.
  • Retirees are very resilient and adapt to many unexpected changes and shocks.
  • Widows often adapt quite well.
  • Divorce after retirement and a major long-term care event cause major financial disruption.
  • Some retirees make very large gifts to children when the child loses a job or experiences major problems.
  • Dental expenses and home repairs are major items of unexpected expense for retirees.
  • Women are much more likely to be caregivers and to time their retirement because of the caregiving needs of others.
  • Women are more concerned about retirement risks.
  • Many people have retirement planning horizons that are too short.
The decisions that people make throughout life can lead to inadequate savings for retirement and a need for long-term care without resources to support it.

Traps to Avoid  

  • There are several common traps that should be avoided. These are:
  • Spending too much on housing;
  • Not having an adequate emergency fund and using retirement assets for that purpose;
  • Taking on too much debt, particularly credit card and other high-interest debt;
  • Giving too much money to others, particularly children; and
  • Giving up a job for caregiving, without adequately focusing on personal needs. 

What Employee Benefits are Helpful   

Throughout working years, it is important to build up enough assets for retirement. This means saving enough and including protection so that asset growth can continue in the event of disability or a partner’s death. Investing in long-term care insurance is also important.

Post-retirement, it is crucial to make savings last the rest of one’s lifetime, and there are a range of options for doing this. Having long-term care protection is also important. 

Recommendations: Creating a Better Future  

This essay is about some of the challenges facing women. It offers the proposition that women really have different life circumstances than men that affect their retirement needs; individuals, actuaries, financial service companies, advisers, plan sponsors and policymakers all have roles in creating a better future for them.

Steps to a better future include:

  • A planning checklist for women. The example below is a start.
    • Plan for the long term, and remember there will probably be a time when you can’t work.
    • Balance short- and long-term thinking.
    • Understand family resources and what will be there for you in the event of a family breakup.
    • Save enough for the long term.
    • Provide for continued income and asset building in the event of disability.
    • Provide for the family in the event of the death of income earners.
    • Be careful about gifts to children.
    • Do not overuse credit and build up debt.
    • Evaluate the options if you are asked to be a caregiver, and do not sacrifice your future for others.
    • Maintain an emergency fund.
    • Have a plan for dealing with longevity risk. Consider using payout annuities.
    • Have a plan for dealing with long-term care needs. Consider using long-term care insurance.
  • Benefit plan sponsors including women’s retirement issues in their employee education programs, financial wellness programs and offering support for good retirement outcomes.
  • More long-term personal retirement planning by women, both independently and with knowledgeable advisers.


Anna M. Rappaport, FSA, MAAA, a fellow of the Society of Actuaries (SOA) and member of the American Academy of Actuaries  

This is a condensed version of the paper “Women and Retirement Risk: What should plan sponsors, planners, software developers and product developers know?” published by the Society of Actuaries in its Diverse Risks Essay Collection, in 2016. https://www.soa.org/News-and-Publications/Publications/Essays/2016-diverse-risk-essays.aspx.

For more understanding of post-retirement risks, see “Managing Retirement Risks, a Guide for Retirement Planning,”at https://www.soa.org/research/research-projects/pension/research-post-retirement-needs-and-risks.aspx.

For further information, visit Women’s Institute for a Secure Retirement (WISER) (www.wiserwomen.org).