Facing Finances Alone
Become more involved in your household's money issues.
By Bob Barry, CFP

If you are an older married person who has left the family finances, from record keeping to investing, up to your spouse, you may want to become more involved — especially if you are a woman. Consider a few of these sobering statistics:

• On average, women outlive men by five years.
• Due to divorce or widowhood, eight in 10 women eventually will be the sole financial decision makers of their households.
• The average age for widowhood for American women is 56.
• Women generally receive smaller retirement benefits and are twice as likely to live in poverty or depend solely on Social Security for support.

While most men and women today are financially savvy, it's not uncommon to find an older married woman who doesn't know how to balance a checkbook, invest in a mutual fund, or complete a tax return. It's clear from the statistics above that women, in particular, need to make sure they are involved in their household's finances. Like single men and women who have had to manage their finances all along, many married people will need to make crucial financial decisions on their own someday. Without money-management skills, those decisions could be disastrous.

So what should you know about money management? It's best to start with the basics: budgeting, saving for retirement, investing, insurance, estate planning, and taxes. Many good books, magazines, seminars, and professional advisors are available.

Review your household's entire financial situation with your spouse. For example, where is the money invested, and why were certain investment decisions made? If your spouse were to die before you, should you change some of those investments? Discuss these issues. It's best to understand the basics of investing and types of investments before this discussion.

Go over all the financial records with your spouse. Where are the life insurance policies kept, and how much are they worth? Is there a will or a trust? Use this opportunity to make sure the correct beneficiaries are on all documents. Are there debts you don't know about? What financial advisors and institutions does your spouse do business with? Now would be a good time to meet your spouse's financial planner, attorney, accountant, broker, insurance agent, and other advisors.

Some spouses may balk at this household financial review. They may not understand why it's important or feel as if you're encroaching on their turf. They may think, "I have a large life insurance policy to take care of my spouse when I die." Yet, it is important for you, as a beneficiary, to know how to manage the large lump sum you will receive from the insurance company. You don't want to feel intimidated and invest the insurance benefits too conservatively or, worse, be taken advantage of by scam artists or aggressive salespeople who will try to persuade you to invest in something inappropriate for your circumstances.

It's also a good idea to establish your own credit while you're still married, instead of relying on your joint household credit. In the event of divorce or widowhood, a good credit history will be vital.

If you're still working, beef up your own savings for retirement. One reason older women are more likely to live in poverty than older men is because women live longer but don't save as much for retirement. If you both are retired, review your spouse's retirement resources carefully to see exactly how well they will take care of you should he or she die before you.

Finally, consider getting a long term care insurance policy. Care required for a terminally ill spouse can deplete the household's assets. Long term care insurance can help minimize the financial effects of such an illness and leave the surviving spouse able to live out his or her life more comfortably.