Statistically, women are more likely to outlive men, but they earn less and are more likely
to take time off to take care of their family members. Although they may save a slightly
higher percentage of their paychecks than men, they have less set aside due to being
more risk-adverse and the fact that generally, they find investment and finances
overwhelming and complicated.
This creates a two-fold problem—the potential to not have enough money to last
throughout their retirement, and being thrust into a position of having to handle all the
family finances (becoming the “CFO” of the household) if their spouse passes away first.
Throughout my career, when speaking to women about life, disability, health and
retirement concerns, the majority of these ladies were unaware of what they have, what
the expenses are, and how what they are saving individually and as a family unit will affect
them in the future. Most of the women I spoke with assumed that their husbands were
taking care of everything and that they didn’t need to know that information.
In a way, I understand that. As the wife and mother of a household with grade-school
children, delegating a “confusing”, “overwhelming”, and “boring” task like paying the bills,
taxes and handling investment decisions seems like a no-brainer with the other items that
need to be juggled (I’m still trying to delegate the laundry). But in the end, this doesn’t
serve the women we love well. Here are a few tips that can help women (and men)
navigate the CFO hurdle, as well as elevate their own financial success.
Involvement of Goals and Status: Have a discussion at least annually (tax time can be
a good time to reflect on “The State of the Union”) about where you are financially, what
kind of shared vision you have for the future, and the steps to take to get there. Reviewing
wills, insurance policies and beneficiary designations on anything that will pay money out
to anyone is vitally important. When reviewing your retirement, insurance policies and
investment holdings, you’ll want to make sure they are up to date with the appropriate
amount of coverage, are properly funded– and your portfolios are aligned with the amount
of risk and diversification that is appropriate for your goals and time horizon.
There are numerous sites to help: Mint.com, PersonalCapital.com and Vanguard for
investing, etc., but you may have a higher chance of financial success if you have a
financial advisor that is sensitive to your and your spouse’s needs, goals and risk
tolerances. Numerous studies have shown that women are most likely to fire their
financial advisor once the spouse passes due poor understanding of her needs. Women
are looking for someone to relate the financial side of life to… life! Having a competent
financial advisor can help with difficult conversations about money, can come up with a
financial plan that suits your lifestyle and needs, and can organize, implement, and
manage the tools to get you to where you want to go, while making sure that you do not
take on unnecessary risks or costs to get there.
Passwords! My husband uses a separate password keeping system, and even though
the mortgage, property taxes, etc., are paid through our joint account, I didn’t realize that
he was going in on a monthly basis and retrieving the utility bill with a separate password
(a good example of delegating) and that he potentially has other accounts with usernames
and passwords (investment, health, computer administration, etc.) that may have changed
since the last time I thought of it – so having access to your significant other’s passwords
is a crucial timesaver.
Important Files: Recently, a client of mine was desperately looking for a life insurance policy that her now deceased father-in-law mentioned he had. Please note that there are insurance companies that will not check to see if the insured has passed away in order to not pay a claim to the listed beneficiary. It is extremely important that these policies and policy descriptions be kept in one place so that someone can file a claim on your behalf.
Additionally, many of these newer insurance and annuity policies have chronic and critical illness benefits that can be paid out in the event of a stroke, heart attack, coma, and even memory disorders. Having easily accessible information about what is included in your plans will allow your spouse or family member to not only make sure you get the financial
assistance that you’ve paid for, but add a significant measure of dignity and choice if a chronic or critical concern arises. Working with a holistic financial adviser can also help ensure that you are covered in these areas, and help break down what you currently have and what you need. Below is a snapshot, courtesy of Russell Investments, as to what files should be set aside and put into a fireproof/waterproof safe:
Additional information such as funeral arrangements, plot details and specific items that you’d like your loved ones to have should be included in these files.
Contact Info: If you use a CPA/Accountant, Lawyer, Financial Advisor, Agent, or Investment Broker, including their information and contact details in your safe is important in case information goes missing.
Communication and other Family Members: My father, years ago, asked me to be the executor (or executrix to be grammatically correct) of his estate when he passes away. He gave me the combination code to his fireproof safe, which holds his important documents.
Would you believe that he changed his box a while ago and now has a wildly different digital number? If you are or will be potentially responsible for handling your parents’ affairs or the affairs of other loved ones in your life, don’t assume that things have stayed the same!
Final Thought: Some people (women, parents, children, men) may view these discussions as “morbid”, and that money discussions are private, taboo and/or overwhelming. If you need help starting a conversation with a spouse or a loved one, want to stress test your current financial plan (or need to start one), or just want to review what you have to make sure it’s current - shoot me an email or give me a call.
Starting these conversations now, when there is no stress, will go a long way to not only ensure financial success, but also make the potential transition to “Family CFO” go more easily.
To your Health & Wealth!