Why Women Should Manage Their Own Money
For many women, retirement isn't the relaxing haven it's cracked up to be. Because women earn less over their lifetime than men and live longer in retirement, they also tend to have less saved. According to a
Even those with incomes over the poverty level often face hardship. Nursing homes, which women have a greater chance of entering because they generally live longer, cost an average of
What can women do to protect themselves? A lot, it turns out. Here are six strategies:
Maintain management skills. Traditionally, marrying couples turned over the finances to one person to manage. But women who want to keep their investing and budgeting skills sharp for life should keep a hand in their finances. Since women live to be 80 on average, versus 75 for men, even those in solid marriages are likely to have to manage their own money one day. According to the
Consider a spousal IRA. Nonworking spouses, such as those who are taking time out of the workforce to care for children, can still contribute up to
Overestimate money needs. Because people are living longer and inflation erodes the value of money, many underestimate their savings needs.
Manage your own money. A study from the
In couples where one spouse (usually the husband) took charge of all financial matters, the other spouse (usually the wife) often faced financial struggles later in life. The problem with that approach, practiced by one third of the couples, is that when husbands die, women often find themselves with less money than expected, and they don't know how to manage it. On average,
Although women 65 and older are three times as likely as men to survive their spouse, many men face the same challenge. That's why it's important for women -- and men -- to stay involved in managing their finances.
-- If my spouse were to die, how would that affect the household's income?
-- What would an expensive illness do to our retirement savings?
-- If either spouse were to die, would the survivor be prepared to take over management of the finances?
Each spouse should also know how much the couple spends each month, the location of savings and investments, and how to access the funds. Couples can also involve a trustworthy financial adviser, especially if one spouse is not comfortable with investment decisions.
As spouses have long known and behavioral economists confirm, a chief benefit of marriage is that it lets individuals focus on what they are good at -- whether it's earning money, running a household, or a mix of the two -- and benefit from their partners' skills as well. But too much specialization can one day leave a widow or widower in the dark when it comes to essential financial skills and knowledge. A system that involves both partners keeps either from having to teach himself or herself under stress later.
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Personal Finance - Why Women Should Manage Their Own Money
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