The gender gap: why women should care about long-term care
Women today are living a life that is quite different from their grandmothers and even their mothers. Most are in the workforce and earning good salaries, and they understand money in ways that earlier generations of women did not. Yet, there are some things that are slow to change. There is still a gap in most of their retirement plans, and that gap is protecting themselves and their spouses (if they are married) against long-term care risk.
Women: providing care, needing care, aging alone
Why is a conversation about long-term care as part of the retirement planning process so important for women in particular? Looking at the statistics, there are some real differences between men and women that can have an impact on a woman’s financial future and her quality of life. Women are:
- More likely to live longer
- More likely to be widows
- More likely to live alone
- More likely to be caregivers
- More likely to drop in and out of the workforce
- More likely to earn less money
- More likely to have spent down assets to provide spousal care
- More likely to reside in a long-term care facility
All these factors can come into play as women age. From a longevity perspective, women are the winners — but they have more unknowns about their longer life that can make them more vulnerable. They often marry men who are older, and outlive them. It’s common for a wife to care for her husband, often for years, neglecting her own health and spending down hard-earned money when she can no longer provide the amount and level of care needed. When her husband dies, she is not likely to remarry. It’s not unusual for men to get married again after the death of their wife. As some women say, “as soon as a man is single again, the casseroles start appearing at the door."
This is not to disparage men. Many have spent years caring for their wives, have used up assets to pay for care and find themselves alone. But the odds are greater that women who become widowed or divorced will end up living by themselves, often without family members nearby to help out if care is needed and with less money available to pay for their own care. And because age and chronic conditions are correlated, care needs can intensify over time.
Despite the advances that women have made in the workplace, particularly for younger women, overall, women still earn less than men. This can impact their financial security as they move into retirement and beyond. One reason, of course, is the gender pay gap. But another is that women are the ones who drop in and out of the workforce or go from full to part-time employment or stop working altogether—to care for their children, to care for aging parents and for other reasons such as a husband’s relocation or decision to retire. A Society of Actuaries study reported that women were more likely than men to say that their spouse’s retirement or caregiving responsibilities prompted them to retire earlier than expected.1
Single women and women without children are a special case. They most likely will not have family members to rely on should they need care or the financial resources to pay out of pocket.
Retirement planning: gender differences
For all the reasons mentioned above, it's clear to see that a good retirement plan becomes equally or more important for women. There are some subtle differences in attitudes and behaviors of women and men that financial service professionals should be aware of as they start the long-term care conversation. Studies find that women are more worried than men about having enough money in retirement.2 And women feel they are not very knowledgeable about financial products.3 They also lack confidence and take fewer risks. Younger women appear to be more comfortable setting financial goals and making financial decisions but the stats above indicate that women of all ages are still not on the same financial wave length as men.
When it comes to long-term care concerns, studies report that both men and women worry about paying for health and long-term care in retirement, but it’s an issue of even greater concern to women. It’s interesting to note that in a recent study, women indicated as their top financial priority that they “do not want to be a financial burden on loved ones." Men’s top priority, on the other hand, was “to maintain their lifestyle in retirement.”4 It’s also interesting that women, especially those who are widowed, want to learn about long-term care insurance products from their financial advisors, but say that advisors do not bring it up.5
The long-term care conversation
The need is great to help women protect themselves (and their husbands/partners, if married) against long-term care risk. Here are some things to think about when talking to women.
1. Start the conversation—deep down, women want to address long-term care
As reported above, women appear to have greater concerns about the possibility of needing long-term care than men. While the topic can be difficult and unpleasant for both men and women, women may be more tuned into a discussion about it.
2. Help married women think through their spouses’/partners’ and their own care needs
Ideally, both husband and wife need to address long-term care and purchase long-term care protection. From a woman’s point of view, a husband needs it (if she becomes the caregiving spouse) to help her supplement the care she provides and not spend down assets. And it will be essential for her to purchase as well to pay for her own care where she wants it.
3. Meet the needs of single women
Women who are single, divorced and without children may not have family members to fall back on. A conversation about what they would do if they become incapacitated is especially important to their future well-being.
4. Spend time providing education and information
For those women who lack confidence or believe that they don’t know enough about financial products, take time to explain the value of the product and the features without being heavy handed. Research indicates that women respond well to a collaborative approach to making financial decisions.
5. Build on women’s more balanced approach to risk
Studies show that women are more risk-adverse than men. If this is the case, a long-term care protection product meets their need to hedge their bets as they move into retirement and old age.
In sum, today’s women are smart, well-educated and ready to plan for the years ahead. You have an opportunity to lead a discussion about where they want to live should something happen to their spouses or themselves, to provide sound information in a thoughtful and empathetic way, and to offer a product strategy that will enable them to have a more secure future.
1 Impact of Retirement Risk on Women: 2013 Risks and Process of Retirement Survey Report, Society of Actuaries, 2013.
3 Financial Experiences and Behaviors Among Women, Prudential, 2013.
5 Survey of Widows and Widowers, American College Center on Women and Financial Services, July, 2016.
The Long-Term Care Servicessm Rider (LTCSR) comes at an additional cost and does have restrictions and limitations. A client may qualify for the life insurance but not the rider. The LTCSR is paid as an acceleration of the death benefit.
Life insurance products are issued by Equitable Life Insurance Company (NY, NY) or Equitable Financial Life Insurance Company of America (EFLOA), an Arizona stock corporation and are co-distributed by affiliates Equitable Network, LLC (Equitable Network Insurance Agency of California in CA; Equitable Network Insurance Agency of Utah in UT; Equitable Network of Puerto Rico, Inc. in PR), and Equitable Distributors, LLC. Variable products are co-distributed by Equitable Advisors, LLC (Member FINRA, SIPC) (Equitable Financial Advisors in MI and TN) and Equitable Distributors, LLC. When sold by New York based (i.e. domiciled) Equitable Advisors financial professionals life insurance is issued by Equitable Financial Life Insurance Company (NY, NY).
Life insurance contains exclusions, limitations, and terms for keeping it in force. For costs and complete details, contact a Financial Professional.
Equitable and its affiliates are not affiliated with Dr. Sandra Timmermann.