Nine Things FAs Need to Know About HNW Women and Longevity

This message is urgent. Why? Because there is a new reality when it comes to affluent women, their longevity, and a financial issue unique to them.

1) Your clients who are UHNW/HNW white females could easily live to be 92 years old or substantially older. Few in our industry seem to grasp the critical difference this makes in long-term financial planning. This demographic group has the highest life expectancy of any other demographic group in the US. ¹

2) You must be aware of this when doing long-term financial planning for your clients in the aforementioned demographic group. ²

3) 70% of married women will become widows. To put it another way, only 30% of males will outlive their female spouses. How will widowhood affect your female clients financially especially if the late husband had children by a previous spouse?

4) At age 62, women comprise 56% of all Social Security beneficiaries. If you move forward to age 85, 66% of Social Security beneficiaries are women. You will note the substantial gender difference.

5) According to the Social Security Administration, “women reaching age 65 in 2015 are expected to live, on average, an additional 21.5 years…” This means that the average age of mortality for this group is 86.5 years. What is important to understand is this is the average of all women in the US.

6) White women live substantially longer than women of color. ³

7) “… the richest American women live 10 years longer than the poorest women.” Hence, don’t use the average Social Security life expectancy for your UHNW/HNW female clients. ⁴

8) The richer you are, the longer you live. The consensus seems to be that wealthy people on average will live more than seven years longer than the poor. This figure is for both genders combined. ⁵ As mentioned, a wealthy white woman will live the longest.⁶

9) Women report being happier than men and happier people live longer. “…individuals with higher levels of well-being tend to have better long-run outcomes in terms of both health and wealth.” ⁷

Last comes an indefinable factor but one which you need to keep in mind for yourself and when planning for your older clients. Miracle drugs could extend life far longer especially for your UHNW/HNW clients. We cannot predict what miracle drugs will be invented in the years to come but they will be invented. An example is the anti-bacterial drug, penicillin. Prior to its introduction, people often died from simple infections which became major infections and could not be treated effectively.

After penicillin was introduced in the mid-1940s, it subsequently saved and extended the lives of hundreds of millions of people. Just one drug did this.⁸ How can we know that another wonder drug with this widespread applicability won’t be invented in the next ten years? This would extend all lives, but wealthy women would still live the longest.

Since more than 80% of FAs are middle-aged men, you might not be as cognizant of this issue as you probably should be. But it will be a significant issue for your clients who are women as well as your clients who are couples, whether married or not.

It is critically important for every FA to be aware of the new reality of much longer life spans for wealthy women and this reality must be incorporated into any long-term financial plan in which a woman is one of the principals.

To learn more about this topic, see Cannon Executive Vice President and Subject Matter Expert Linda Eaton's eBook, Advising Women Investors.

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Resources: 

 ¹ https://www.washingtonpost.com/news/wonk/wp/2015/09/18/the-government-is-spending-more-to-help-rich-seniors-than-poor-ones/?utm_term=.03b741213d7a

² https://www.brookings.edu/research/what-growing-life-expectancy-gaps-mean-for-the-promise-of-social-security/

³ http://www.businessinsider.com/huge-racial-gap-in-life-expectancy-2014-1

⁴  https://healthinequality.org/

⁵ https://www.nytimes.com/interactive/2016/04/11/upshot/for-the-poor-geography-is-life-and-death.html

⁶ https://www.washingtonpost.com/news/wonk/wp/2015/09/18/the-government-is-spending-more-to-help-rich-seniors-than-poor-ones/?utm_term=.03b741213d7a

⁷ https://www.brookings.edu/blog/up-front/2016/03/04/some-good-news-for-international-womens-day-women-are-usually-happier-than-men/

⁸ http://www.pewforum.org/2013/08/06/living-to-120-and-beyond-americans-views-on-aging-medical-advances-and-radical-life-extension/

Contributing Writer: Subject Matter Expert Charles McCain