We celebrated International Women’s Day on March 8, a global day celebrating the social, economic, cultural and political achievements of women.
Even with the great strides women have made, there are still some areas in which we struggle. As a financial planner, there are two statistics that plague me daily and give me great concern for many women. According to the U.S. Census Bureau, 80 percent of women will outlive their husbands, many by more than 14 years. And, according to an ABC News report, Women Take the Biggest Hit In Divorce, women who get divorced live at 45 percent of their pre-divorce lifestyle.
Let’s start with the first statistic: Women will outlive men, yet most women, over their lifetime, will earn less and save less than their spouses. This is for many reasons. Some women may choose to take time out of the workforce to care for children, lowering pension and Social Security dollars, and even those who remain in the workforce, on average earn 80 cents to every $1 a man makes.
Retirement saving is a struggle for everyone, but for women the odds are stacked against them. Even more troubling is that many women are “in the dark” about their financial resources and liabilities. Every couple manages their financial house differently, some spouses take more ownership than others, and it is like any household chore. More often than I would like to admit, I speak to women who have recently lost their spouse and are not only grieving, but are completely blind to their financial assets, liabilities and general income needed to run the household.
The second statistic regarding divorce has a similar cause. The average duration of a marriage that ends in divorce is eight years—for many marriages eight years in, this means a child may have entered the family. Often the wife in a traditional marriage takes time off to focus on the children. Time out of the workforce and sleep deprivation as a new parent often strain one’s ability to focus on much else, which leads many women to defer financial management of the household to their husbands. This leaves the wife again in the dark about financial matters and, in the event of divorce, which is now hovering around 50 percent, women often get the short end of the bargaining stick because they are simply without knowledge of their financial situation.
The good news is that the same solution works for both scenarios. Fortunately, like with most things in life, proper planning can help to prepare women financially for their spouse’s end of life or end of marriage. I have found that as men age, many want their spouses to get more involved with the finances to make sure everything is in order if something were to happen to them—but many women have no interest. Whether or not you or your spouse initiate the conversation, it is necessary to put together a financial plan that takes into consideration joint assets and liabilities and properly plans out retirement income needs for both you and your spouse’s lifetimes. It is also important to have an independent third party that you both trust become fully aware of your financial balance sheet and help you in the financial planning process.
Seek out a financial planner you trust, perhaps an independent advisor who is a fiduciary who will customize the plan for you and be sure to account for the “unknowns” life will throw your way. I would recommend you take some time to create a plan and review your plan once a year at least. This isn’t about being “interested,” this is about being engaged in and taking control of your financial future.
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