Think about this retirement planning conundrum: 80 percent of married men die married, while 80 percent of married women die single.
This U.S. Census data shared by Rebekah Barsch, vice president of market strategy for Northwestern Mutual, is more evidence that married women need a plan to cope with their finances after they are widowed.
A new study on women and retirement, released Wednesday by the Transamerica Center for Retirement Studies, shows that women spend a lot of energy worrying about the well-being of people other than themselves. Some 28 percent expect to take time or have already taken time away from their jobs to care for a child or an aging parent. Nearly 75 percent of those women believe that this period of caregiving has reduced their own ability to save for retirement. On top of that, 31 percent expect that when they are retired, they will be called upon to provide financial support for family members other than a spouse.
If women were big earners, that might not matter, but Transamerica points out that 45 percent of women work part time and only about 60 percent of those part-timers have access to an employer-sponsored retirement savings plan like a 401(k). That helps explain why 54 percent of women are not confident that they will be able to retire comfortably.
What should you do to make sure that you're not that lonely old lady, sharing her tabby cat's food? Here are some suggestions from Transamerica and others.
- A wife needs a financial plan for life in widowhood. It's a tough thing to talk about, but steel your resolve and have that conversation with your spouse and your financial planner.
- If your spouse is entitled to an old-fashioned, defined benefit pension, federal law requires that the company make available a "joint and survivor" benefit option. A couple can choose to take the higher single-life option, but that choice requires the spouse to sign a waiver. You may be tempted to sign because the payout will look so much better. But women outlive their husbands by an average of five years, so agreeing to waive your right to part of the pension after he dies can be a very costly mistake.
- Social Security pays the surviving spouse the higher of the two Social Security benefits. If the husband is the bigger earner, encourage him to delay claiming Social Security as long as possible. The longer he waits, the more you'll get when he dies.
- Consider buying life insurance on the husband and long-term care insurance on the wife. Ideally, people should carry both types of insurance on both of them, but if money is tight, this combo is a good compromise. The reality for most couples is this: She'll provide long-term care for the husband and then need more income after he dies.