Financial and estate planning is essential for everyone, but the fact that women are more likely to earn less over the course of their careers and live longer than men creates a concern for their futures. While the gender pay gap is narrowing, in 2015 women earned 83% of what men earned, according to Bureau of Labor Statistics. This can mean that women get fewer Social Security benefits, save less for retirement and have smaller pensions. Women are also more likely to live on their own in their senior years, either by choice, divorce or the death of a spouse.
It is, therefore, critical that they assume the sole responsibility for their financial decisions. They should develop a financial plan that is designed to have their assets last through the youngest spouse’s age 92 or later—understanding that odds are one spouse may end up spending several years alone.
With couples, one spouse typically is in charge of the finances, paying bills, and making financial decisions. However, it’s important for both spouses to have an understanding of their overall financial plan, the insurance policies in place, where assets are held and how to access the accounts if something were to happen to the other spouse.
When only one spouse makes the financial decisions for the family, it’s important for both to be involved in developing the estate plan because each may have differing views on where assets should go. However, they still make each other their primary beneficiary. If you pass first, your assets may not be used or distributed the way you intended, if your spouse is in control. It also may be a surprise to a surviving spouse to learn that he or she doesn’t have access to assets they thought they would.
When one spouse dies, the surviving spouse will grieve. This can also be the case in divorce or incapacitation. As a result, the surviving spouse shouldn’t make any major decisions for several months. He or she will need to become comfortable with the new financial life. Risk tolerances may change at this point, and plans may need to be altered.
If you’re not the one who is in control of the financial decisions in your home, you need to have a working understanding of your plan, so when you have to be in charge, you can handle it.
Reference: Marietta (GA) Daily Journal (August 10, 2017) “With women living longer, more financial planning may be needed”