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Unplanned Costs: health care is one of the top retirement expenses for women

SEP. 20, 2018

As women prepare for retirement, there are many essential expenses they’ll likely be planning for, like those for housing and food, and maybe even some discretionary expenses to travel the world and start a business. However, one of the largest costs in retirement may not be at the forefront of your clients’ minds: health care.

In retirement, women need to spend more after having earned less

Funding health care in retirement is particularly critical for women because—on average—women have longer life expectancies than men. Additionally, the potential for unforeseen health issues makes planning for health care costs in advance difficult, especially since women often face higher overall medical expenses than men.

According to the National Center for Health Statistics, a woman lives 81 years on average compared to a man’s average life span of 76.1 In the U.S., 80 percent of women outlive their husbands.2 With this longer life expectancy comes greater expenses and a longer retirement for which to prepare.
Despite women’s advancements in the workforce, governmental data shows that women still earn less over the course of their careers. According to the U.S. Census Bureau, the 2016 female-to-male earnings ratio was 0.81. This modest 1.1 percent increase from the previous year was the first time the ratio has improved in a decade.3

Further, despite evolving gender roles, a woman’s family is still likely to depend on her. The pay gap issue is magnified by women taking time away from work to care for their children, aging parents, grandkids or an ill spouse, and this time away impacts her lifetime earnings. In fact, Center for American Progress found that each year out of work can cost a family more than three times the parent’s annual salary in lifetime income.4

Is it possible to fully fund women’s health care needs in retirement?

With these dynamics at play, it’s no surprise that women worry about their ability to afford their health care costs in retirement. Less than half (47 percent) of affluent women age 50 or older are confident that they will be able to pay for health care beyond what Medicare covers, and 78 percent list health care costs going out of control as a top fear in retirement, according to Nationwide’s 2018 Health Care and Long-term Care Survey.5

This fear is not unfounded. Our analysis found that the average woman claiming Social Security benefits at age 62 could spend about 75 percent of her monthly benefits on health care and long-term care expenses in retirement — leaving only a quarter of each check for other essentials, like housing and food.6

Your clients may wonder how much is truly needed to fund health costs in retirement. The Employee Benefit Research Institute (EBRI) revealed that if folks want a high chance of being able to cover out-of-pocket health expenses in retirement, the average couple needs $273,000, and some couples with higher drug expenses could require as much as an estimated $370,000.7 This number alone is a tough pill to swallow. And, this number does not include the expenses affiliated with a potential long-term care event.

And yet, many of your clients may believe that Medicare will be the silver bullet to cover these costs. In reality, Medicare provides only 64 percent of funding on average.7 Everything else will need to be paid for using different income streams such as your clients’ Social Security benefits, or purchasing a Medicare supplement plan.

If they are not prepared to bridge the potential gap between what Medicare covers and what health care actually costs, they could run the risk of outliving their money.

Help female clients afford more in retirement

52 percent of women haven’t discussed their retirement costs with a professional financial advisor5. It’s within your power to discuss this potential cost with your clients—and help them to adequately prepare for a number of different scenarios. Start with these three steps:

  1. Broach the topic with care: Your clients are already concerned about the impact health care costs will have on their retirement savings. Begin the discussion with asking them if they have an idea of what their out of pocket costs are likely to be.
  2. Estimate their potential health care costs: Utilize Nationwide’s Heath Care Cost Assessment to receive an estimate of each client’s personalized expected health care costs in retirement.
  3. Plan to help close their savings gap: Use your clients’ personalized Health Care Cost Assessment results, along with Nationwide’s simple Health Care Solutions Guide: Quick Quote tool, to help your clients plan for covering estimated health care costs in retirement.

Want to learn more about how to help your female clients prepare for retirement? Check out our whitepaper, The XX factor: How to future-proof your advisory business by better serving women.





  • 1

    “Life expectancy at birth, at age 65, and at age 75, by sex, race, and Hispanic origin: United States, selected years 1900-2015,” National Center for Health Statistics (2016).

  • 2

    U.S. Census Bureau (2016).

  • 3

    “Income and Poverty in the United States: 2016,” U.S. Census Bureau (September 2017), p. 6.

  • 4

    “Calculating the Hidden Cost of Interrupting a Career for Child Care,” Center for American Progress (June 21, 2016).

  • 5

    Nationwide 2018 Health Care and Long-term Care Survey. The survey was conducted online by The Harris Poll on behalf of The Nationwide Retirement Institute between February 5-22, 2018, among 1,007 U.S. adults aged 50 or older with a household income of $150K or more, of which 486 are women, and 522 U.S. adults age 50 or older who are caregivers.

  • 6

    Analysis from the Nationwide Retirement Institute Social Security 360 Analyzer® and Health Care Cost Assessment, 2017. Assumptions used were: a 62-year-old female, living in Ohio, life expectancy of 88, filing at age 62, primary insurance amount of $1,300 and total estimated health care costs in retirement of $309,382. Inclusive of Long-Term Care costs. Individual results will vary.

  • 7

    “Savings Medicare Beneficiaries Need for Health Expenses: Some Couples Could Need as Much as $370,000, Up from $350,000 in 2016,” Employee Benefits Research Institute (December 2017). Includes only Health Care costs.

  • *

    This information is general in nature and is not intended to be tax, legal, accounting or other professional advice. The information provided is based on current laws, which are subject to change at any time, and has not been endorsed by any government agency.

  • **

    Please note that Nationwide, its affiliated companies and their representatives do not give legal or tax advice.

  • ***

    Please consult your attorney or tax advisor for answers to your specific tax questions.

NFM-17334AO (09/18)