Preparing for the Future: Women & Financial Planning – TheStreet

By Leila Evans, CFP

Although times are changing, many couples over the years have adhered to a model where the husband manages finances and investments while the wife takes a greater role in child-raising and ensures that all the bills are paid. As a result, whether due to personal preference, maternal responsibilities, or societal expectations, married women commonly don’t take as active a role as they should in retirement planning.

The problem is that wives frequently outlive their husbands, as evidenced by the fact that the lifespan of the average American woman is 81 years, compared to 76 years for the average American man. Additionally, divorce can create a scenario where a woman suddenly has to take on financial responsibilities that she previously leaned on her husband to handle. Due to these considerations, it’s important for women to get involved with retirement planning sooner rather than later, so they can prepare for the possibility of being left completely in charge.

Leila is a Regional President based in MAI Capital Management’s Charlotte office. She is a CERTIFIED FINANCIAL PLANNER™ Professional and serves as a Board member of Safe Alliance.

Leila Evans

Attend all financial meetings

The first step is to attend any and all meetings that their husbands have with financial advisors, estate planners or accountants. These meetings offer the best opportunity to become better educated on not just general financial concepts, but your specific assets and portfolios. For example, how are your assets titled? Are they held jointly, or in your name or your spouse’s? Attending meetings will give you a chance to ask questions, and you could even set up a one-on-one with the advisor after a meeting to ensure these questions are answered.

There are also plenty of educational resources targeted at women that can help fill any knowledge gaps. Keep an eye out for webinars and publications that cover the basics of investing, markets, financial planning or any other related topics that might apply to you. Additionally, a good credit score can be an important element of retirement planning and general financial well-being. Some women don’t have a credit card in their own name, and this should be addressed in order to help build and maintain personal credit.

Attending workshops and events specifically for women can be a great way to network and learn in a welcoming and relaxed environment. Many women feel more comfortable asking questions when they’re around other women in similar situations.

Relative risk tolerance 

An additional reason why women have historically been less involved in financial matters than their male partners is that they tend to be more risk-averse. This also manifests in investing approaches, as men are likelier to take risks and invest aggressively, whereas women are typically more conservative. For example, when the COVID-19 pandemic hit, women investors were more likely than men to have taken precautions to protect their financial situations. They revisited their financial plans and reallocated their assets according to the economic environment.

This more defensive mentality is potentially tied to both genetic predisposition and education. While women might be more risk-averse than men, in general, greater financial education could help them understand the potential benefits of taking a little more risk without jeopardizing their overall portfolio.

Wives and the financial plan

Another important factor to consider in retirement planning for a couple is how open the male spouse is to his wife playing a significant role. Particularly in older generations, there can be some entrenched viewpoints about a man’s role versus a woman’s role, resulting in resistance to the idea.

This would need to be addressed on a case-by-case basis, but the truth is that husbands often start to develop health issues before their wives, and it would make sense for them to recognize that women tend to outlive their male partners. If a husband passes away and his wife is left in charge of the finances, it’s important for her to be knowledgeable about their assets and financial plan. I believe that in most cases, husbands want to know their wives will be taken care of and should be happy to include them to help achieve that goal. Additionally, women tend to be planners by nature, so they can likely contribute valuable insight to financial and estate planning.

If a woman wants to play a more active role in planning but her husband is opposed, it may be beneficial to build her own relationship with an advisor, especially if she has her own assets and real estate. Some couples prefer to combine everything and manage it together, while others keep assets separate their entire lives. There is no universally correct approach — it depends on what works best for both spouses.

In case of divorce

Divorce can present another challenge for women since it’s typically the husband who has established and built relationships with the couple’s financial professionals. As a result, the wife often must start from scratch in building a team of advisors for herself following a divorce. This can be very difficult if she has no prior experience with managing finances. At the least, beneficiaries for 401(k) plans and life insurance policies will likely need to be updated, so women should know how to access these important details and make changes.

During divorce settlements, women also tend to underestimate how much money they’ll need to cover monthly and unexpected expenses or fail to consider the cost of therapy for themselves and their children. This can result in women needing to return to work, which can be challenging if they have kids or have been out of the workforce for a while. Additionally, many women will prioritize keeping their house over investment assets when settlement details are being determined. But houses don’t generate income, so it would make sense to think more objectively about these priorities.

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Generational differences in retirement planning

Among younger generations, there are higher percentages of women who work and make significant incomes. Both of these factors can motivate them to take more active roles in retirement planning and other financial matters. Millennials and Gen Zers are also technologically savvy, enabling them to access the abundant educational resources available online, as well as the wide-ranging financial tools and advice provided through rapidly proliferating smartphone apps. That said, younger generations should be wary of robo-advisor platforms that treat investing like it’s a video game. Comprehensive, long-term financial planning is best conducted with the help of a trusted in-person advisor.

Despite the significant progress made toward equality between men and women in recent decades, many wives still tend to let their husbands either primarily or entirely manage the couple’s finances and portfolios. It’s better for both spouses to be involved for several reasons, but especially because women tend to outlive their male partners. Many educational resources exist for women to build their financial knowledge, and I recommend taking full advantage of those. But the most significant step that wives can take if they seek a greater role in planning is to start accompanying their husbands to any meetings with financial advisors.

About the Author: Leila Evans, CFP®

Leila is a Regional President based in MAI Capital Management’s Charlotte office. She is a CERTIFIED FINANCIAL PLANNER™ Professional and serves as a Board member of Safe Alliance.

The opinions and analyses expressed herein are subject to change at any time. Any suggestions contained herein are general, and do not take into account an individual’s or entity’s specific circumstances or applicable governing law, which may vary from jurisdiction to jurisdiction and be subject to change. Distribution hereof does not constitute legal, tax, accounting, investment or other professional advice. Recipients should consult their professional advisors prior to acting on the information set forth herein. In accordance with certain Treasury Regulations, we inform you that any federal tax conclusions set forth in this communication, were not intended or written to be used, and cannot be used by any taxpayer, for the purposes of avoiding penalties that may be imposed by the Internal Revenue Service.