In today’s Office Hours, Eric answers Janet’s question: “Is there anything different that women should be doing differently than men when it comes to financial planning?”
With women living longer and often outliving a spouse, there can be a few aspects of a plan that affect women greater than men.
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Eric Brotman: [00:00:00] Welcome to Don’t Retire… graduate!: the podcast that asks you what you want to be when you grow up so you can graduate into retirement with purpose and passion. I’m your host in valedictorian, Eric Brotman. Welcome to Office Hours where we answer listeners questions about personal finance, retirement readiness, and more.
We received a question from Janet who asked, is there anything women should be doing differently than men when it comes to financial planning? And this is an especially important topic because with women tend… with women tending to live longer than men and women tending when they marry in a traditional way, men tend to be older in a marriage, which means there are a lot more widows than widowers in the United.
So Janet, what, what women have to do is plan for not only a period of widowhood but also a period of potentially living alone, which is a significant thing, and they have to plan for longevity in a totally different way.[00:01:00] So, you know, in a married couple situation, a traditional married couple, you might have a, let’s say you have a, an 80 year old man and a 75 year old woman.
The, the woman’s life expectancy is seven to 10 to maybe even 12 years longer than the men’s at that point. So if the man were to get sick, the woman is typically gonna help provide some care until he dies, and then she’s gonna outlive him by a decade or plus or minus, which means she’s not gonna have that same level of care or help in the house on a typical basis.
It also means that there’s a pay cut coming to her. You say, what do you mean there’s a pay cut, isn’t there one less mouth to feed? And the answer is, well, yes, there is one less mouth to feed. However, a couple of things are gonna happen. When you’re widowed, there are expenses that go up and they go up because you need sometimes to pay for additional help that you might have had in a marital situation.
The other thing is you’re gonna lose some income. If there was a pension, the pension might not have a hundred percent survivorship benefits on it. It might be [00:02:00] 50% or 75% or nothing at all. If you’re both collecting social security, the smaller of the two benefits goes away, so there will be less income at the same point as they’ll be more expenses, and that’s why, because women outlive men and because there tends to be a period of widowhood, there has to be different financial planning. Now, do you need different financial planning as a 30 year old? Typically, no. Assuming you have the same career prospects, the same earning potential, and so forth, and. Again, politically, we can talk about whether that’s the case or not, but it certainly should be.
And assuming that’s the case, there’s no real difference to the planning at 30. But as you get closer to retirement age and you get closer to that moment where you want to have financial independence, it is critically important that you position some of your assets in a place where there’s income you can’t outlive, or at least the ability to transition to that at some point.
And the reason that I say that is there’s a tendency for couples to put everything in [00:03:00] joint name and then one spouse or the other potentially gets sick or has end of life care and it’s really expensive and the assets get spent down and then this perfect storm of suddenly being alone, living for an extended period of time, having an a, a pay cut and potentially having less assets really can play a huge role.
So how do you– how do you preserve this? If you’re married, make sure if it’s financially possible that you have life insurance on your spouse that he can’t out. Because the last thing you want is to own just term insurance that expires when he’s 73 and now he’s 77. He drops dead and there’s no life insurance.
You need enough life insurance so that you can draw against that principle to replace the loss of income from Social Security and to replace, at least in part, some of the higher expenses that you’re going to have. So, Janet, it’s a great question. I hope I’ve answered it. I hope I’ve answered it [00:04:00] fully.
The short answer is women need financial planning just as much, if not more than men, and for a longer period of time. And so I hope you, if you, if you don’t have that level of advice, I hope you get it. And I hope you’re, I hope this was helpful in terms of pointing you in the right direction.
So thanks for your question. If you’d like to send us a question we might answer on a future episode of Office Hours, please post it on our Facebook page or tweet us at @Brotmanplanning. I’d like to thank all of you for listening and watching today. We’d love to hear from you. Please send us a message at dontretiregraduate.com or leave ratings and reviews on your favorite podcast platform.
If you enjoyed our show, don’t keep us a secret. Tell your friends and family so they can join you on your journey to financial independence. I thank you for coming to Office Hours. We’ll be back next Thursday with another engaging guest. For now, this is your host, Eric Brotman, reminding you Don’t retire. Graduate.
Don’t Retire. Graduate is part of the Evergreen Podcast Network[00:05:00]
Narrator: Securities offered through Kestra Investment Services, L L C, Kestra IS member Finra, S I P C, investment Advisory Services offered through Kestra Advisory Services, L L c Kestra AS. An affiliate of Kestra IS. Kestra IS or Kestra AS are not affiliated with Brotman Financial or any other entity discussed.
