Women are likely to outlive their husbands, which means women may have to make their money last longer in retirement. Women may also have to manage their own finances at some point, and in order to do this successfully women should be aware of what questions to ask their financial advisers. See article below.
Bradenton Herald, Sunday, February 10, 2008, Karin Grablin
Wives, Prepare to Outlive Your Husbands
The good news for women: They live longer, so they likely have more time to enjoy their retirement. The bad news: Because of this, their retirement will be much more expensive than for men.
Statistically, women tend to outlive their husbands; on average, women will survive their husbands by 15 years. Bottom line – women need far more retirement income than do most men.
Chances are high that a woman will have to manage her finances on her own at some point in her life, so here are a few questions that women should discuss with their financial advisers:
â€¢ How will my living expenses change if I’m suddenly single?
They will not likely be cut in half. The Women’s Institute for Secure Retirement recommends forecasting expenses to be 80 percent of what they were as a couple.
â€¢ What about my husband’s pension? Women shouldn’t assume they can rely on their husband’s pension for income. If the husband dies first, his wife may only receive 50 percent survivor benefits, which probably isn’t enough to carry on her lifestyle. Not surprisingly, most widows who are poor now were not poor before their husbands died.
â€¢ What about my husband’s 401(k) and IRA? Most employer-sponsored plan assets and IRAs can be rolled over into the wife’s IRA (depending on beneficiaries named). The rules normally in place for her IRA will govern how she can take taxable withdrawals. That can get tricky if she’s younger than 59Â½ and needs income, so seek professional advice.
Also, do a “beneficiary audit” periodically, so if you need to, transitioning these assets can go as smoothly as possible. If your husband has left a 401(k) behind at a previous job, consider rolling these assets into an IRA now – while he is still alive.
â€¢ What about Social Security? If you both collect Social Security, you will be entitled to receive whatever benefit is greater. A widow is entitled to her late husband’s benefits as long as she doesn’t remarry before age 60.
â€¢ What about annuities we may own? If you are the named beneficiary, you may have several options for receiving these funds, including continuing the benefits of the contract as is. Since there are so many varieties of annuities and benefits out there these days, discuss your options with a qualified professional.
â€¢ What should I know about my finances? Don’t just sign tax returns – understand them. Ask your tax preparer for explanations. Identify your financial assets and debts, and have a plan for budgeting and paying down debt. Both of you should understand what you own and what you owe, and use insurance to plan for the possibility of death or disability.
If you are a long way from retirement, try to work as long as you can at the highest salary you can. This will give you more opportunities to save for retirement, you will have fewer retirement years to try to fund, and you could also earn higher Social Security benefits.
Karin Grablin, a certified financial planner, is with Dictor & Martin, 2 N. Tamiami Trail, No. 608, Sarasota. She can be reached at (941) 906-7222.