May is Women’s Health Month, so in recognition of that, let’s dive into the nuances of women’s healthcare costs and how that impacts their financial plans.
Why should financial advisors make this a priority? Because healthcare is one of women’s top concerns and addressing this is one way to ensure your female clients are happy with you.
According to Merrill Lynch, 70% of women are likely to recommend their financial advisor to a friend or relative. And 40% of women are likely to follow their financial advisor to another firm (versus 30% of men). Bear in mind, too, that the majority of women leave their advisors shortly after the death of a spouse — 70% to 80%, according to commonly cited figures.
Higher Health Costs
Women also spend a lot more than men on healthcare during nearly every stage of their lives, according to the Peterson-KFF Health System Tracker. In their 20s, 30s and 40s, this is largely due to costs associated with pregnancy and childbirth. But healthcare costs continue to increase after a woman’s reproductive years, jumping to an average $10,632 for ages 55 to 64, up from $6,898 between ages 35 and 44. Once women reach 65+, they face the highest healthcare costs thus far in their lives (nearly $14,000 annually) and often have a fixed income.
Being able to manage the healthcare gender toll is problematic for many reasons. Women often spend less time in the workforce, largely due to caregiving responsibilities, and they often earn less than men. This means they may not be able to save as much as men through employer-sponsored retirement plans and IRAs, and their Social Security benefits may be lower. And after a divorce, the average decline in household income is 41% for women, compared with 23% for men.
Understanding the unique challenges facing your female clients and helping them create a more personalized, comprehensive plan can help you improve their financial and physical wellness. Here are some suggestions on how to do that:
Engage Both Partners
Earlier I mentioned that 80% of women leave their advisors within a year of being widowed. Many reports say it’s because of “unsatisfactory advisor communication.” Maintaining good communication and a relationship with both partners will help ensure that if either one of them becomes widowed, the surviving partner will stay with you. And since women outlive men by an average 5.9 years, according to the CDC, the surviving partner will most likely be the woman.
While the CDC says the average life expectancy of women in the U.S. is 79, the average age of widowhood is just 59. This means that many women will be the sole financial decision-makers for at least two decades. A longer life span coupled with less earnings could spell trouble if your client isn’t prepared.
Review Health Needs Annually
As a financial advisor, one way you can ensure that your female clients have enough funds for retirement, including their healthcare needs, is to not use general estimates. Make it a priority to learn each client’s specific needs and goals. Since health needs may change quickly as your clients get older, it’s especially important to revisit this topic annually with your female clientele.
Discuss Medicare and Health-Insurance Options
According to the 2024 Fidelity Retiree Health Care Cost Estimate, on average a 65-year-old may need $165,000 in after-tax savings to cover health care expenses. Integrating healthcare costs into a financial plan can be challenging, but a great way to ease into this is by discussing your clients’ health plan options with them as they experience new life events.
As your clients approach age 65, talk to them about their Medicare coverage options and help them analyze the optimal choice for them based on their budget, goals and health needs. If your client is retiring before 65, that’s another great opportunity to plan for healthcare costs.
Provide Educational Resources
Healthcare-related webinars and blogs are a great way to engage your female clients and make them feel like you’re looking out for them specifically. This, in turn, could help reduce the anxiety that many women feel about their finances and healthcare costs.
Final Thoughts
By tailoring women’s financial plans to the specific challenges and opportunities they face, you’ll create a more accurate and comprehensive financial plan and improve the advisor-client relationship.
Additionally, if you’re intentional about how you communicate and collaborate with female clients, you will see an increase in retention.
If you embrace holistic and comprehensive financial planning, you have a fiduciary duty to consider every part of your client’s life and well-being when creating their financial plan. And since women have unique challenges and opportunities related to their wealth and health, that needs to be considered to protect their retirement assets and overall well-being.
Christine Simone founded healthcare planning company Caribou, recently acquired by Move Health, and is now head of partnerships for Move Health.
