The following is a guest post from Cristina Acosta and Nancy Fromm, co-owners of Money Wise, a Scottsdale, Ariz.-based financial-planning firm that helps create retirement-income strategies for people nearing or in retirement. Both are Series 65 licensed and are fiduciaries.
The importance of women taking an active role in a couple’s financial planning represents more than just jockeying over who gets to control the checking account.
Women on average live longer than men, which means they are going to need more money in retirement or else risk outliving their savings. That means they have a lot at stake. And women – men, too, for that matter – often don’t realize just how long retirement might last. If you retire around age 65, it’s possible your retirement is going to last 25 or 30 years.
The death of a spouse can pose numerous financial difficulties. First, the survivor has to deal with the emotional issues associated with grieving, which means some financial decisions may be put on hold. That’s not necessarily a bad thing. You don’t want to rush into any decisions you don’t have to make immediately.
But it won’t take long to start experiencing some of the financial consequences. If both spouses were drawing Social Security, one of those monthly checks is about to disappear. If the spouse had a pension, the amount of the check may be reduced for the survivor, or it could be eliminated.
Knowledge is Power
There are plenty of things worth knowing about finances before and after a spouse dies, from long-term care planning to tax minimization planning. Here are just three that women should keep in mind:
- Seek professional advice. This is especially important for women who left finances up to their husbands. A financial professional can help you get a better handle on the options for making retirement more secure. Find someone you’re comfortable with. You’ll want someone who can help you plan strategically and will take the time to understand you, your situation and your needs.
- Understand the importance of life planning. For women, it’s more than the money. It’s about understanding the emotional and even physical health issues that woman face when dealing with finances. Having an integrated approach to the planning process empowers women to address the connection between their health and wealth.
- Protect your assets. If you’re nearing retirement or already in retirement, it’s critical to protect the assets you already have. Review how much risk you have in your investments and decide whether you need reduce that risk, and more importantly, validate whether your assets are laying the foundation towards a clear journey to achieving your dream-retirement lifestyle.
It’s vital that women appropriately manage what they have. It needs to last and provide the retirement lifestyle they’re after.