For many of us, planning for aging looks very different than it did for previous generations—and that’s especially true for women. Some of us live to be over 100. Many are in their 50s when they send their last child to college. Others retire at 60. Most women have decades left after such events in their lives. The US As reported by the Census Bureau, with the average age of widowhood at 59, and the growing trend of “grey divorce” — a term used to describe divorce after age 50 — many of us may find ourselves scrambling emotionally and financially. The complications of aging alone. Without relying on a blueprint or a partner to follow, it’s important as women that we adequately prepare for the myriad of circumstances that lie ahead – from the good to the bad and even the unexpected. Be prepared for good Whether it’s an empty nest, retirement, divorce, or widowhood, many of the milestones of aging can trigger a sense of emptiness—and with it, a loss of purpose and identity. Yet moments of transition can also present a unique and rewarding opportunity for self-discovery. With fewer demands from a career, children, or spouse, we may have more time to look inward and find new meaning. This is an example of the “good” that can come with aging. A particularly influential way to find a new purpose later in life involves philanthropy. Here are some tips on how to do that:
Reflect on the causes you are most passionate about and the values you strive to uphold. Consider creating a charitable mission statement to help you think about what and why you want to accomplish through philanthropy.
Take stock of your resources. This involves not only your treasure, but also your time and talent. Once you take stock, you can decide how much you can give to ensure your philanthropic plan doesn’t undermine your long-term goals.
Give wisely. Take the time to learn the most effective ways to fund your charitable activities while keeping your goals in mind. For example, establishing a donor-advised fund has personal and financial benefits, such as streamlining your philanthropic interests and income tax benefits.
Read: 4 Ways to Get a Tax Break from Your Charitable Donation
Consider how you want to involve younger family members in your giving strategy. Aligning on causes you are passionate about creates opportunities to spend meaningful time with younger generations and convey your charitable values.
Be prepared for the worst One of the biggest challenges women face as we age is the potential for a major medical emergency and the resulting health care costs. By the time you reach age 65, average annual medical costs are more than $11,000—almost three times the average annual cost for someone in their 20s or 30s. If healthcare costs continue to rise faster than the rate of inflation, your lifetime healthcare costs could exceed $2 million. This amount does not include the cost of long-term care, which can be hefty: the average annual cost for a private room in a nursing home facility is $108,408. Planning for these expenses is important to provide you – and your family members – with more security, control and peace of mind. Here are some ways women can prepare for the “bad” that comes with aging:
Predict spending needs and all healthcare costs up to age 100 So that you don’t risk overspending or outliving your assets.
When able, maximize contributions to a Health Savings Account (HSA) to offset potential medical-related expenses and reduce your income tax liability. While you can’t contribute to an HSA after you enroll in Medicare, you can use the money saved for additional expenses after you turn 65.
After you retire, work to lower costs by contesting the Medicare high-income surcharge, which can be as much as 3.5 times what most retirees pay. Consider using preferred pharmacies and requesting a generic or therapeutic alternative that covers the same need but costs less under your plan.
Explore insurance to help cover the costs of long-term care at home or in another facility. Given the rising cost of this type of insurance, first identify how much you can cover from your savings and income, and buy enough insurance to cover the gap. Keep in mind: If you have an HSA, you can withdraw money tax-free to pay a portion of the premium based on your age.
Be prepared for the unexpected A shocking nine out of 10 women will be solely responsible for their finances during their lifetime. Yet studies show that most of us lack the confidence to make critical financial decisions. Adding to the lack of confidence is the fear of saving our money in retirement. To combat both, it is important to be proactive. Take the time now to better understand all aspects of your wealth, so if you’re forced to navigate the unexpected alone, you’re ready to take control and make more confident financial decisions. Here’s how to make sure you’re preparing for the “unexpected”:
Take inventory of all the details of your possessionsIncluding what you own (your assets) and what you owe (your debts).
Work to develop a plan that can facilitate resilience in times of economic stress or crisis, including but not limited to:
Keeping a clear picture of your day-to-day expenses, including any future needs, so you can respond appropriately if necessary. Making sure you have enough emergency funds to cover surprises. Assessing whether you have more debt to pay. Having the right mix of assets for your stage of life and understanding what can be easily sold if needed. Knowing if you have enough assets to fund how you want to live in retirement (a good assumption is that it takes $1 million for every $40,000 of desired annual income to avoid living beyond your means). As women, it’s important to remember that planning for aging doesn’t have to be a DIY job. In fact, a team you trust can make it even more successful. Often, this includes CPAs, estate planning attorneys, and wealth advisors. When deciding who to hire on your team, choose people who talk to you, not at you. Work with experts who speak in plain language and encourage you to ask questions so you can clearly understand your financial goals and decide what you need to prepare for — and, importantly, make the most of your golden years. Steph Wagner is National Director of Women and Wealth at Northern Trust.