Married women need to stay on top of family finances, even if a divorce is not in the cards.
After I wrote about gray divorce, I received a thought-provoking response and query from reader Gail Jarvis that I thought deserved a follow-up. Gail, 58, lives in a suburb of Atlanta, where, she says, “so many women my age are like me — college-educated stay-at-home moms with traveling husbands who volunteered at our children’s schools.”
Gail returned to the workforce eight years ago as a substitute teacher, and she earns $175 a day. She is funneling her earnings into her own Roth IRA, but most of the couple’s retirement assets are in her husband’s name with her as the beneficiary. Married for 31 years, she has no plans to divorce and admits that “when I was younger, I was so busy raising children that I never thought about our finances. But I do now. How can I make my future financially more secure?”
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Women and family finances
Gail and other women in her situation should start with rule number one: Know where your money is. Discuss your finances with your spouse on a regular basis, or at least “schedule a ‘money date’ a couple of times a year so that you know your income and expenses, where your accounts are and how much you have,” advises Leslie Thompson, a chartered financial analyst and cofounder of Spectrum Wealth Management in Indianapolis.
One alternative to a discussion is to go through your tax return to see a rundown of all your accounts. “I’m surprised by how many women only see the signature page on their tax returns,” says Thompson.
If you have a financial adviser, “ask for a one-on-one conference,” says Kimberly Foss, a certified financial planner and partner with Mercer Global Advisors in Roseville, Calif. “Ask him or her to run a ‘Monte Carlo’ simulation to see the probability of running out of money.”
It’s also important to control money in your own name outside of a retirement account so that you can get access to it if you need it. “All women should have their own emergency fund, whether it’s to buy a nice gift for your spouse or to run the household for a few months,” says Foss.
A high price
Gail feels “very blessed to have had the opportunity to be able to be at home with my children as they were growing up. If I had a redo, I would still have done the same thing.” But many women in that situation “are paying a very big price financially,” says Lisa Zeiderman, managing partner at the Miller Zeiderman law firm in New York City.
In Gail’s case, one option might be to boost her earnings by tutoring, for example, or finding a job that pays more — and using the extra money to set up an emergency fund as well as funding her retirement savings.
Gail and her husband still have a mortgage on their house, so a life insurance policy on his life could still make sense. Even better, says Zeiderman, Gail could own the policy as well as being the beneficiary, which would give her more control. And she and her husband should consider long-term-care insurance.
For women who plan to stay out of the workforce for long periods to raise children, Zeiderman is a strong advocate for a prenuptial or postnuptial agreement. “If a woman knew in advance that she would have sufficient funds in case of divorce or widowhood, she could have the luxury of being the non-breadwinner,” says Zeiderman.
Absent that, keep your foot in the door, whether by working on a part-time basis, volunteering in your community or continuing to maintain your network. Says Zeiderman, “That’s an absolute necessity.”
Note: This item first appeared in Kiplinger's Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
Read More
-
5 FAQs About 529 College Savings PlansThanks to recent policy changes, families have more options for what to do with money sitting in tax-advantaged 529 accounts.
-
How Lower Interest Rates Affect Your FinancesThe Fed's rate cuts will provide relief for some borrowers, but savers will have to work harder to get decent returns.
-
What You Should Know About Spousal IRAsWithout spousal IRAs, you would need an earned income to contribute to your retirement account.
-
What's Hurting Retirees' Confidence?Retirees aren't feeling that confident about their financial health.
-
How to Use a Dependent Care FSA to Lower Child Care CostsWith a dependent care FSA, you can set aside pretax funds to cover care expenses.
-
Got $1,000? Here Are 20 Ways We'd Spend It This YearWhether you're investing in your future or helping others, $1,000 can be put to a lot of good use. We've rounded up some ways to save, donate or spend it.
-
Is a 55+ Community Right for You?Before you sign on the dotted line, consider HOA fees and community culture.
-
The Investing Strategies I Teach Young MothersThese simple investing strategies were developed to help single mothers, but they'll help all young people build a decent nest egg.
