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  • Why Women Pay More For Healthcare- And What It Means For Retirement

    January 26th, 2017

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    It’s no secret that women pay more for many things—compare the prices of women’s drugstore products to men’s and the difference is obvious. But did you know women will also pay more for healthcare over their lifetimes? A recent report revealed that, on average, a 30-year-old healthy woman will pay $118,632 more for healthcare over her lifetime than a man. The report was released by HealthView Services, and it’s worth a look—it includes several projections, included expected Medicare costs depending on age, race and health conditions.

    More specifically, the report predicts that women who are currently age 30 will likely live to 91-years-old and spend $548,098 on healthcare. Comparably, men will live to 87 and spend $429,466 on healthcare. The difference is attributed to the longer life expectancies of women.  Healthcare costs are extremely high in the final years of life, explaining the more than $100,000 difference.

    So what does this all have to do with retirement? Those high healthcare costs will be levied on women during their retirement years, at a time when funds are already tight for women who, on average, have less in savings than men. The retirement gap exists primarily because women on average earn less than men during their careers and are more likely to take time off for caregiving. As a result, HealthView Services calculated that women end up with 23% less in Social Security payments than men.

    These numbers are a reminder that women need to factor in the growing cost of healthcare as they age into retirement planning. Women are also more likely to need long-term care because of their longer life expectancies. According to a report from Genworth, the cost of that can be very expensive—the average cost of a private room in a nursing home is $92,000 per year and home care costs are on average about $3,500 per month. In addition to greater life expectancies than men, women spend more twice as many years in a disabled state as men do: 2.8 years if they live past 65, 3 years if they live past 80 (American Association for Long Term Care Insurance).

    When planning for retirement, it’s extremely important to factor in the high, growing cost of health care in your final years. For more information and resources on health care and retirement planning, including long-term care, visit WISER’s page on health care.

    It’s Never Too Early to Talk to Children about Retirement

    December 22nd, 2016

    Sonya Meets Her Future SelfRetirement is a concept that most adults don’t fully comprehend, let alone kids. 401(K)s, mutual funds, compounding interest, Social Security… all of the terms and jargon surrounding retirement saving can be confusing even to the most well-educated person. One of the best ways to make sure that children grow to understand the importance of retirement saving is to start planting the seeds of knowledge at a young age. The movement to educate children about financial literacy at school is gaining traction across the country, but it is still important to talk to children about the importance of long-term savings outside of the classroom too.

    A valuable tool for introducing the concept and value of long-term saving is WISER’s publication, Sonja Meets Her Future Self. The illustrated children’s book tells the story of a young girl named Sonja who travels through time and meets herself at different points in her life. The book was published in collaboration with the Wyoming Retirement System. You can download the book here to share with the children in your life. You can also watch a narrated video of the story. After you finish, here are some lessons you can discuss together:

    1. Make Sure To Always Save Part Of What You Make

    In the story, Sonja’s grandpa takes her to the bank to open an account, and every week after that, they go to the bank together to deposit part of her allowance. This is a great reminder to kids that even if they are making a small amount of money each week, it is worthwhile to put some aside. Once they get older and their paycheck grows, their weekly savings will as well. Although many transactions are done online, the weekly act of visiting the bank the way Sonja and her grandpa did can be a much more lasting reminder to always put something aside.

    2. When You Do Buy Something, Choose Something With Lasting Value

    Following her grandpa’s advice, Sonja begins saving a little bit of money every week. But he also makes sure to let her know that “it’s OK to spend money.” When you do, it should be for something really worthwhile. In Sonja’s case, she saved enough of her allowance each week to eventually be able to buy her first skateboard. She rides the skateboard all the time, and it even allows her to travel into the future—a purchase well worthwhile! When she is 18, Sonja tells her younger self that she used the money she has been putting away each week from her part-time job to buy herself a used car—another smart, worthwhile purchase. Sonja didn’t buy things she used once and then got bored with, she bought items with real value that she made long-term use out of. Her spending options are a great lesson that spending money is not bad, as long as you are smart about it.

    3. If You Save A Little Bit Over A Long Time, Eventually You Will Have A Lot

    Sonja started saving every week at the age of 11. At first, she only saved up enough to buy a skateboard, but eventually she had enough to buy a used car, and eventually enough to live off of in retirement. Her saving story is a great lesson that even if you only save a little bit, over a long time, it will grow.

    During this gift-giving season, share the story of Sonja with a child in your life.  It is a gift that can last a lifetime!

    National Family Caregivers Month: Leaving a Job or Working Part-Time Because of Caregiving

    November 23rd, 2016

    November is National Family Caregivers Month, a time to think about the millions of Americans who take care of others. This year’s theme is “take care to give care”, a reminder that the first rule of taking care of others is to take care of yourself first. In acknowledgment of National Family Caregivers Month, WISER is publishing a series of blogs examining caregiving and the ways women can take care of themselves by planning for its financial impact.

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    Adding the job of caregiving to an already busy schedule can be impossible without some sort of sacrifice, be it sleep, socialization, or relaxation time. For some, that sacrifice is work—upon becoming caregivers, many leave their jobs or reduce their hours and work part-time. For some, this is the best option, but it must be considered very carefully. Be sure to exhaust other options before taking this step because it can have a tremendous impact on your financial future. Leaving your job will not only cost you your salary, but also benefits like retirement contributions and health insurance. If you do have to leave your job or reduce your work hours, here are a few things to think about:

    One important thing to consider before making any changes to your work schedule is where you are in the retirement and benefit schedule. If you are reducing your hours, find out the minimum number of hours you need to work to continue getting retirement benefits and health insurance, and try to work at least that much. Also try to stay at the job until you are vested, meaning you have worked long enough to have full ownership over the benefits you’ve received. Leaving your job before you are vested may mean forfeiting money that your employer has contributed to your account.

    It is also important to think about your insurance when deciding whether to leave a job or work part-time. Will you be able to take your benefits with you when you leave your current job? If not, where will you get health insurance and how much will it cost? Get some estimates before making a final decision. Having health insurance is important and not a sacrifice you should make for caregiving. Under a federal law referred to as COBRA, you may be able to continue coverage under your former employer’s policy for 18 to 36 months, but you will have to pay the full premium. If you are over 65, you are eligible for Medicare. Another option is your state’s healthcare Marketplace, which was established by the Affordable Care Act. Visit healthcare.gov or call 1-800-318-2596 to apply and find out more about your plan options. The Marketplace will also tell you if you qualify for free or low-cost coverage available through Medicaid.

    Also, consider how you will manage your money and continue saving toward retirement. Try to pay off credit cards and other debts so you are on stable financial footing before leaving your job. It is important also to create a budget to help you manage your funds and plan for any additional costs that might come from caregiving. WISER’s “Financial Steps for Caregivers” booklet has a great budget worksheet insert that can help you get started. Plan to continue saving for retirement, even if you are only able to save a small amount. If nothing else, resist the urge to spend any money you having in retirement savings accounts since that money can continue to earn interest, even if you are not working or contributing to it.

    Finally, do not take on the entire responsibility for caregiving if you have other family members who can help either physically or financially. If you have to leave your job, consider talking with your family about receiving pay for the care you are giving. Remember most of all that you need to protect your own future while caring for others. Check out WISER’s “Financial Steps for Caregivers” booklet which includes lots of other great information and resources.

    WISER

    About Us

    WISER is a nonprofit organization that works to help women, educators and policymakers understand the important issues surrounding women's retirement income. WISER creates a variety of consumer publications including fact sheets, booklets and a quarterly newsletter that explain in easy-to-understand language the complex issues surrounding Social Security, divorce, pay equity, pensions, savings and investments, banking, home-ownership, long-term care and disability insurance.

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