Why Annuities Can Play a Larger Role in Women’s Retirement Plans
At 58, it is common for a woman to sit down with her husband and review their retirement projections. The numbers look comfortable until she realizes her income may need to last several years longer than his, possibly during a period when she’s managing the household alone.
Retirement planning for women must account for that possibility, since longer lives, caregiving-related savings gaps, and widowhood can potentially place added pressure on a finite nest egg. Guaranteed lifetime income addresses one part of that equation directly.
| In This Article: Three financial realities can make it harder to stretch women’s retirement income. A closer look at the numbers shows where an annuity may add stability and where other savings still need to carry the load. |
Why Women Often Enter Retirement With Less Income
Women generally live longer than men, yet many begin retirement with fewer financial resources. Career interruptions to raise children or care for relatives can reduce earnings, workplace contributions, employer matches, and future Social Security benefits.
According to an analysis from the U.S. Department of Labor, mothers who provide unpaid family care may see lifetime earnings reduced by about 15%. The average employment-related lifetime cost reached approximately $295,000 in 2021 dollars.
Social Security data show how those earnings differences can follow women into retirement. In December 2024, retired women received an average worker benefit of $1,780 per month, compared with $2,181 for retired men.
Women’s retirement savings gaps rarely stem from a single decision. Years of lower contributions, missed investment growth, and smaller benefits can quietly add up.
How a Longer Life Becomes a Financial Risk
Living longer is a gift, but it asks every retirement dollar to work harder. CDC data show that a 65-year-old woman in 2024 could expect to live another 20.8 years on average, compared with 18.4 years for a man.
An average is not an expiration date. Many women will live into their 90s, especially those in good health or with a history of longevity in their families.
Longevity risk in retirement develops when savings must support withdrawals, inflation, healthcare, housing, and unexpected expenses for longer than planned.
A market decline can hurt a portfolio, yet the larger outliving-your-money risk may simply be a long life funded by a balance built for fewer years.
Why Lifetime Income Responds Directly to Longevity
A lifetime income annuity can provide payments for as long as the covered person lives, subject to the contract terms and the insurer’s claims-paying ability. Unlike a savings balance, the payment schedule does not depend on correctly predicting lifespan.
Discussions about why women need annuities should begin with the income gap, not the product. An annuity may be useful when Social Security, pensions, and other dependable income do not fully cover essential expenses.
Guaranteed income for women can serve a specific purpose:
- Covering part of the gap between dependable income and essential bills
- Reducing reliance on portfolio withdrawals for basic expenses
- Creating income that continues during a long retirement
- Making monthly cash flow easier to manage later in life
An annuity does not fix under-saving. Proper planning usually pairs it with Social Security, investments, cash reserves, and other assets.
The Widowhood Factor Many Plans Miss
Women are increasingly likely to manage money alone as they age. Federal aging data reported 31.9 million women and 25.9 million men aged 65 or older in 2022. Among community-dwelling older adults, about 28% lived alone in 2023.
Widowhood can change household income quickly. A surviving spouse generally does not continue receiving two full Social Security checks. She may qualify for the higher applicable survivor benefit, while the smaller payment disappears.
Many expenses remain. Property taxes, insurance, utilities, home repairs, and healthcare rarely fall in proportion to the lost income.
Joint lifetime income may continue for a surviving spouse when the contract includes that payout structure. Single-life income, survivor percentages, death benefits, and refund provisions work differently, so each option deserves careful review before a decision is made.
Where Annuities Fit and Where They Don’t
Annuities can be useful for women when they’re considered within a broader retirement strategy rather than treated as a standalone solution. Committing every available dollar can leave too little liquidity for medical bills, repairs, travel, or family needs.
Surrender periods, withdrawal limits, rider charges, inflation exposure, and beneficiary provisions can affect how a contract performs. Some annuities offer lifetime income through annuitization or an income rider, while others focus mainly on accumulation.
The U.S. Securities and Exchange Commission’s investor guide provides a helpful overview of how different annuity structures actually work.
At Matador, we start with expenses and dependable income. Our team then reviews Social Security, savings, liquidity, legacy priorities, and potential income gaps before discussing a product.
The goal is to build a balanced retirement income plan, not to force every concern into a single solution.
Pressure-Test Your Plan With Three Questions
Before committing to a particular plan, be sure to ask yourself:
- Does my income still work if I live to 95?
- What changes if I’m managing retirement alone with one fewer benefit check?
- Are essential expenses covered by dependable income, or do they rely on withdrawals from a finite balance?
Women’s retirement income planning requires honest assumptions about longevity, widowhood, and available resources. Matador’s team-based process can help you carefully map those numbers, identify any potential gaps, and decide if guaranteed lifetime income belongs in your retirement strategy.
Contact our team today to begin reviewing your retirement planning options and learn the next steps that you should take.
