Although they face the prospect of living more years in retirement than men, women nearing retirement underestimate how much they will need to pay for their future health care costs even more so than men nearing retirement, according to a Nationwide Financial survey.

According to the survey conducted by Harris Interactive of 1,250 Americans with at least $250,000 in household assets, women close to retirement estimate they will spend $4,624 each year on health care beyond what Medicare covers. That’s 21 percent less than the $5,882 that men nearing retirement estimate they will spend each year on things like premiums, copayments and deductibles.

However, both are way off. A 2012 study found that a 65-year-old couple retiring today would need $240,000 to cover his medical expenses in his retirement years-- and that doesn’t include long-term-care costs.

“The fact is women live longer than men, which means they will spend more time in retirement and that places women at a greater risk of outliving their retirement assets,” says John Carter, president of sales and distribution for Nationwide Financial. “It also may increase their chances of incurring long-term care costs during their golden years. That’s why it’s especially important for women to plan for health care costs in retirement.”

According to the survey, nearly half of both women and men say they are “terrified” of what health-care costs may do to their retirement plans. Yet, women respondents nearing retirement are much more likely than male respondents to say they have not estimated:

• How much they will spend each year in retirement on things like premiums, copayments and deductibles (41 percent vs. 27 percent men)
• How much income in retirement they will have from things like Social Security, retirement accounts, or pensions (21 percent vs. 12 percent men)

On average, women estimate that Medicare will cover 65 percent of their annual health-care costs. But similar to male respondents, when asked how they came to this percentage, 85 percent either guessed or did not know. Only 2 percent said they were told this by a financial advisor.

Women are also slightly more likely than men to say they are somewhat not confident to not at all confident in their plans for living comfortably in their retirement years (46 percent vs. 39 percent men).

Opportunity for advisors

While 65 percent of women have discussed their retirement with a financial advisor, of those who have, only one in 10 talked about how much they should expect to pay in health-care costs apart from Medicare (compared to one in four men).

Of those who have discussed retirement with a financial advisor, 77 percent of women say they were helpful to very helpful in estimating health-care costs in retirement (63 percent men), and a whopping 86 percent say they were helpful to very helpful discussing the role Medicare will play in their retirement (52 percent men).

According to the survey, more than half (56 percent) of women say it is very to extremely important that they educate themselves about Medicare when planning for retirement, and 43 percent of women say they plan to discuss health-care costs beyond those covered by Medicare with their financial advisor.

“The good news is women want to have these discussions, and financial advisors can play a major role in helping women plan for and live in retirement by discussing the role Medicare will play in their retirement and helping them estimate health-care costs in retirement,” Carter says.

Challenges women face

Women face several challenges, including:

• They live longer. Women live an average of five years more than men and are 10 times as likely to reach age 85.
• They earn less. Women have gained ground in the workplace, but they still earn less than their male counterparts. According to 2010 Census Bureau statistics, a woman makes, on average, 77 cents to every dollar a man makes.
• They are caregivers. It is estimated that 75 percent of unpaid caretakers in the U.S. are women, and if a spouse is not available, the caretaker usually becomes the daughter or daughter-in-law. And according to the Women’s Institute for a Secure Retirement, women typically work 12 years fewer than men over their lifetime to care for children and other family members.

“While out of the workforce, women are not able to build their pension benefits, pay into Social Security or contribute money to an employer’s 401(k) or other retirement plans, all of which can negatively affect retirement savings and income,” says Shawn Britt, director of the advanced consulting group for Nationwide Financial.

The sacrifice women make for their families at the expense of their health and finances does not come cheaply. A survey by AARP reports more than 60 percent of female caregivers made career sacrifices that included reducing work hours, passing up promotions, or quitting their job to accommodate their care-giving responsibilities.

“Women need to understand the risk they face when being thrust into the role of a caregiver, the cared-for, or both,” Britt says. “This risk can take a physical and mental toll and also have a catastrophic financial impact. Families need to be aware of what they will face if they do not plan ahead for this risk both emotionally and financially.”

Women as the cared-for

Women also face challenges as the one left behind and most likely to need care. For a woman age 75 or older, there is about a 70 percent chance that she will be widowed, divorced or never married, while only 30 percent of men are alone for those reasons.

“This not only leaves a woman without a spouse to care for her, but may leave her more dependent on family members both financially and to provide care,” says Britt. She adds that women also represent 75 percent of residents in assisted-living communities and 80 percent of nursing-home residents.

To see the entire survey, visit www.nationwide.com/healthcare.

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By Ayo Mseka
Editor-In-Chief
Advisor Today