It’s not pleasant to contemplate, but because women often take time out from their careers to raise children or take care of elderly parents and still earn less than their male colleagues, their life-time income is usually lower than the average male. While both sexes need to do financial and retirement planning, women are more likely to find themselves facing financial difficulties as they age.
The Marietta Daily Journal’s article, “With women living longer, more financial planning may be needed,” notes that 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 (since women live longer).
It is, therefore, critical that they assume responsibility for their financial decisions. They should develop a financial plan that is designed to have their assets last through the youngest spouse to 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.
It’s important for both spouses to have a thorough understanding of the estate plan. That way, whichever of the spouses survives, he or she will be better prepared to handle the responsibilities of settling the estate.
At Family Estate Planning Law Group we always require both spouses to be present at all meetings so they both know what the estate plan is. We also have a Family Care MeetingTM to go over who may assist the surviving spouse if the spouse who dies has been more active in making financial decisions. Planning ahead will relieve stress and avoid mistakes.
To learn more about proactively planning for retirement no matter your gender, visit our website today and schedule your consultation!
Reference: Marietta (GA) Daily Journal (August 10, 2017) “With women living longer, more financial planning may be needed”