5 Questions All Women Should Ask a Financial Professional

Updated: August 23, 2023

Created in collaboration with Kiplinger.

A secure financial future can depend on you making the best decisions today. While that’s true for most people, it may be especially important for women – who could face extra challenges such as wage gaps, longer retirements, higher health care costs, and more caregiving responsibilities.

To help you navigate the circumstances you may face, and take charge of your plans for the future, here are five questions you should consider asking a financial professional. This professional can also work with your tax and legal professionals to help assist you.

1. How much do I need to save for retirement?

 

Women face different considerations that can impact their retirement savings. On average, women work fewer years and earn less than men,¹ but they also tend to live longer. For example, the National Center for Health Statistics reported in 2021 that women’s life expectancy at birth was 79.1 years compared to 73.2 years for men.² And once women reach age 65, it’s expected that they will live another 20.8 years, compared to 18.2 years for men.³ 

The combination of lower lifetime earnings plus longer lifespans means it may be important to re-evaluate retirement savings goals to cover a retirement that could last 20 years or more. To help address these realities, do your best during your working years to: 

• Consider contributing enough to your workplace retirement plan to qualify for the full employer match if offered – or more if you can.
• Explore additional retirement savings strategies, like opening a tax-advantaged traditional or Roth IRA.
• If you’re married and don’t have earned income, think about a spousal IRA. Under IRS rules for married couples, a working spouse can generally contribute part of his or her earned income to an IRA (traditional or Roth) for a nonworking spouse if the couple files a joint tax return.

2. Do I need long-term care coverage?

 

The lifetime risk of needing long-term care often depends on life expectancy. Women’s greater longevity also means they may need to consider long-term care coverage as a surviving spouse. In fact, it’s estimated that 70% of people over age 65 will likely need some level of long-term care, and women tend to need care 3.7 years longer than men.⁴

With monthly costs currently averaging $5,148 for a home health aide for 44 hours per week and $9,034 for a private room in a nursing home,⁵ considering how to cover such expenses should be part of your financial planning. To keep care costs from consuming your retirement savings, work with a financial professional to evaluate some of these options:

• Long-term care insurance, unlike traditional health insurance, is designed to cover some or all of an individual’s long-term care expenses such as personal care in a nursing facility or your home. Though Medicare may sometimes pay for some short-term skilled nursing and rehabilitative care after a hospital stay, you should not count on it to cover long-term care expenses.⁶
• Hybrid life insurance policies combine long-term care coverage and life insurance. If you need long-term care, you can use part of the policy’s death benefit to help pay for those expenses; if you never use the policy’s long-term care benefits, your loved ones will receive the full death benefit.
• Self-funding is paying long-term care costs out of pocket and depends on a realistic assessment of whether your assets and investing strategy are sufficient to cover long-term care costs on top of years of living expenses.
   

3. How can I better balance risk and returns with my investments?

 

Women may need to save more money for the future because of their increased longevity, but statistics show that they could struggle to accumulate wealth due to a lower tolerance for investing risk.⁷ Many women, however, say they’re actively looking for opportunities to make their money work harder. One survey notes that one of the top things women want help with is finding a financial professional who can help grow their money.⁸ 

What can you do? Ensure your investing strategy balances risk with the potential portfolio growth needed to sustain your financial future. Talk with a financial professional to determine the appropriate amount of risk based on your age, comfort level, and how much income you’ll likely need. Together, you can develop a clear set of short- and long-term goals that will help clarify your approach.

4. When should I claim Social Security?

 

Because women live longer than men, decisions about the timing and source of Social Security retirement benefits can take on extra weight.

You can start receiving reduced benefits as early as age 62 rather than waiting until your full retirement age (FRA), which ranges from age 66 to age 67 (based on your birth year).⁹ If you take Social Security before your FRA, however, the amount of your annual benefit payment will be permanently reduced by 25% to 30%. Similarly, if you wait to collect benefits until you’re older than your FRA, the amount of your annual benefit will be higher the longer you delay starting your benefits until age 70.¹⁰

Marital status may also play a role in your benefits strategy. For example:¹¹

• Married women can generally choose to claim a benefit based on their work record or receive 50% of their spouse’s benefit, whichever is higher.
• Divorced women may be able to claim benefits on a former spouse’s work record under certain conditions.
• Widows are eligible to receive either their own Social Security payment or their late spouse’s as a survivor benefit, keeping the higher of the two payments – but not both.

In some cases, you may be able to strategically maximize payments. For instance, you can claim a late spouse’s benefit before reaching your FRA, then switch to your benefit later, or vice versa.

All of these choices can affect your financial security in retirement, so it’s important to discuss the scenarios and outcomes with a financial professional.

5. How can I protect my retirement while also caring for my loved ones?

 

Women often shoulder the majority of caregiving services for family members.¹² And that support can come with a costly price tag in the form of reduced income, increased financial stress, and at-risk retirement security. In fact, one study reveals that family caregivers spend an average of nearly 26% of their personal income on out-of-pocket costs related to providing care to loved ones.¹³

If you’re stepping into a caregiving role, it’s a good idea to discuss the impact with a financial professional. They can be a resource to help you navigate expenses and income sources as well as determine how much financial support you can provide without jeopardizing your financial future.

Making a plan

 

With these questions as a guideline, work with a financial professional to develop a strategy to help ensure your financial security. Making informed decisions about these key issues may help you better prepare to make the most of your money in the years ahead.