low on savings, short on time older women facing retirement challenges

Nelson, for example, went back to work just a few weeks ago after staying home since 2011, when she was diagnosed with a brain aneurysm. To financially stabilize herself after she got sick, she had to dip into one of her retirement accounts, which came with a hefty 20% penalty, plus taxes.

Experts suggest that, in general, women should save 70% to 80% of their preretirement earnings to live comfortably in their later years. But, Francis said on the conservative end, she would recommend women try to reach 100%. The reason is that although some expenses will go down after retirement, such as commuting and work clothing, other areas of life may need more money, namely health care, which could be completely unpredictable and astronomically expensive.

But even on the low end, those savings goals can feel out of reach for women within a decade or two of retirement. The Schwartz Center for Economic Policy Analysis at The New School gathered a few calculators that can help you estimate how much you need to save for retirement based on your personal information. They are Target Your Retirement by the Center for Retirement Research at Boston College; the AARP Retirement Calculator; Retirement Nestegg Calculator by; and New Retirement.

Although it’s tempting to start collecting Social Security at age 62, experts suggest women who can still work and are healthy wait longer. Because for every year you don’t collect Social Security after your full retirement age, which varies depending on your actual age, your benefit goes up 8%, until you reach 70.

"Social Security is even more important for women [than for men] because we live longer, we are likely collecting longer," said Stacy Francis, certified financial planner and founder of Francis Financial, a firm that frequently works with women around retirement. "It makes [more] sense for you to wait for that bigger benefit at age 70, and then collect it for the next 25 years, than collecting at age 65 that smaller benefit and collecting it for a longer period of time."

Experts say the simplest thing for women to bump up savings for retirement is to take advantage of the IRS catch-up contribution. If you are age 50 and over, the IRS allows you to save $6,000 more on top of the $18,500 annual contribution limit in your 401(k). For individual IRAs, the catch-up amount is $6,500.

"Being too conservative in your investment can actually put you in a greater financial risk because us women we have a longer life expectancy," Francis said, "as well as how many of us unfortunately are coming to retirement with not necessarily enough saved."

A good rule of thumb for stock-bond ratio is to subtract your age from 120 (or 110) as a starting point to calculate your stock asset exposure, experts say. For example, if you are 65 years old, your stocks-to-bonds ratio should be 55:45, or 45:55.

Nelson has always been the breadwinner at home, even before she separated from her husband in 2012. For a long time, she had to juggle multiple jobs so she could take care of her children, which involved paying $1,000 a month for child care. She regrets not saving for retirement earlier, but she also felt like she didn’t really have a choice.

While women may not be able to replace the money they gave to others instead of themselves in their early years, they can still protect their future by putting themselves first now. Of course, that’s easier said than done. Putting yourself first is rarely as simple as cutting off support for adult children.

Nelson’s 86-year-old father needs care around the clock. She chips in $1,000 a month to hire caretakers for him. Still, she does this while working toward her own financial goals. She just doubled on her mortgage payment to about $2,000 a month in the hopes that she won’t have to be in housing debt in 10 years. Meanwhile, she is about to start paying off her student loan debt – $52,316 – for a master’s degree in nursing she received two years ago, when she was staying at home with disability.

"If you have not been tracking your spending, guess what? When you retire, there’s no option any longer," she said. "The stakes are too high that if you are not being conscious about where your money is going, there is no room for error and there’s no ability to make up for overspending in retirement."

If you have a high-deductible health plan (HDHP), experts suggest you consider a Health Savings Account, which has a triple-tax benefit: The money you put into an HSA is tax-deductible; the balance grows tax-free and rolls over each year; and withdrawals from your HSA for qualified medical expenses are not taxed.

The annual maximum HSA contribution in 2018 is $3,450 for an individual and $6,850 for a family. If you are at least 55 years old, you can contribute an additional $1,000 annually. You can read more about using an HSA as a retirement tool in this guide.

Buying long-term care insurance may be another way to prepare. Long-term care insurance is separate from your regular health insurance. It pays out for nursing home, home health care or assisted living and other expenses not covered by regular insurance when you have a chronic medical condition, a disability or a disorder, for two to five years.

Nelson bought a long-term care policy with her previous employer, which cost her about $100 per month. When she was sick and homebound, the policy paid out $8,800 a month. After she started her current job, the policy is still paying her $3,000 a month, which she will stop receiving in a year. Her current job also offers long-term care insurance as part of the benefit package, and Nelson said she plans to buy it as soon as her current coverage ends.

Francis, the CFP, said she’s in her 50s and she bought a long-term care policy when she was in her late 30s. Her family medical history compelled her to go with a premium plan, and while she admits buying the policy in her late 30s was a little early to start paying $3,700 a year for coverage she wouldn’t likely need for decades, she knew that buying it later would cost much more. She estimates her premium would be twice as expensive if she bought it today.

On average, a 55-year-old single woman buying new coverage pays $2,965 a year for a long-term care policy that pays out $150 a day for up to three years, or $164,000 in total benefits, according to a 2018 price index from the American Association for Long-Term Care Insurance. A single 60-year-old woman can expect to pay an average of $3,475 a year for the same plan. And the average annual premium is $4,270 for a 65-year-old single woman.