3 Things Married Women Need to Know About Their Money
About nine in 10 women will have to go it alone, financially, at some point in their lives. When that happens, they need to be ready.
As a financial adviser for nearly 20 years, I’ve met and consoled several women who were devastated by the loss of their husband or the end of their marriage. While the emotional impact of no longer having their lifelong mate is hard enough, their mental anguish is often exaggerated by fear of the financial unknown.
My heart goes out to these women. I’ve found that the women who struggle the most initially haven’t been involved in their family finances, and therefore don’t know how much they have available to live on for the rest of their lives. Even if they know the amount — which sometimes is in the millions of dollars — they may lack the confidence to know whether it’s enough.
While both men and women need to have their eyes wide open when it comes to their money, it’s likely the woman will eventually be living on her own. According to a recent Gender Gap in Financial Literacy study, “the reality is that 90% of women will be solely responsible for their finances at some point in their lives due to the death of a spouse or divorce.”
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Women need to have a basic understanding of how much they have and how it is allocated — property, stocks, bonds and other assets. While a 2014 study by Prudential found that 27% of married women say they “take control” of financial and retirement planning and manage it themselves, viewed another way, 73% of married women do not.
Given this gap in knowledge, here are the three basic financial measures all married women should know about their money:
Find Out Your Annual Household Income.
Most people are now gathering W-2s and other documents to file their 2017 taxes, so it’s a perfect time to determine how much you and your husband earn together. Federal tax forms require information on income from investment accounts, jobs, rental real estate, pensions or Social Security and business investments. If a marriage ends in divorce, the lists of assets and income are a critical part of the property settlement with your spouse.
Review tax returns from the past two years, and be sure to keep a copy of each tax return going forward. Couples filing a joint return both need to sign the tax documents, so don’t be afraid to ask questions if the numbers look really different from last year’s taxes.
Know the Amounts of All Assets and Debts.
At least once a year, sit down with your spouse or partner and make a list of everything you own. This includes checking and savings accounts, 401(k) retirement plans, life insurance and real estate.
It’s important to know your net worth, so next to each asset, make a note about any loans attached to each one. For example, your house may be valued at $750,000, but you may still owe $250,000 on the mortgage loan.
My husband and I examine our combined balance sheet annually to check on the progress toward our financial goals, which includes our college savings plans for our three children, as well as our retirement accounts. This exercise lets us know where we stand — and celebrate if we see we’ve made progress over the past 12 months.
An annual review also helps ensure that couples don’t forget about any investment they may have made years ago, such as an investment in a stock that may not be performing well.
Finally, use this meeting to determine ownership in each asset. For example, are your home and investment accounts owned jointly, or just in your spouse’s name? Ownership will matter if your spouse passes away and could impact how much income tax you pay each year.
Make Certain You have a Will.
If you and your spouse do not have a will, make it a priority to meet with an attorney and bring the household balance sheet to this meeting.
If there is a will, read it and make certain you know which assets you will inherit if your husband passes away. In addition, determine how much income will be available from life insurance and other sources to support you for the rest of your life. For example, if your husband’s job provides the bulk of the household income, will you need to find a job to pay the mortgage and other basic expenses?
Also, if your attorney only provides an electronic copy of the will, print out a copy and keep it in a secure place that can be accessed easily. This will enable the executor to quickly access the will, plus a printed version may be needed for probate court once you pass away.
At the very least, women with knowledge of their household income and assets, and those with a will, can minimize any unfortunate surprises if their spouse passes away or their marital situation changes. It’s stressful enough dealing with the loss of a spouse, so plan now to make certain you have the financial knowledge to handle any unforeseen events. It’s time to get down to work.
-
These Unloved Energy Stocks Are a BargainCleaned-up balance sheets and generous dividends make these dirt-cheap energy shares worth a look.
-
You've Heard It Before, But This Investment Advice Still Pays Off"Time in the market beats timing the market" ¬— been there, done that, right? But don't write off the underlying advice. There's a reason it's a popular saying.
-
How Advisers Can Respond When Clients Ask About Crypto in 401(k)sAdvisers need to establish clear frameworks to address client interest, navigate risks like volatility, and ensure they meet their fiduciary responsibilities.
-
You've Heard It Before, But This Investment Advice Still Pays Off
"Time in the market beats timing the market" ¬— been there, done that, right? But don't write off the underlying advice. There's a reason it's a popular saying.
-
Are Clients Asking About Adding Crypto to Their Retirement Plans? This Is How Advisers Can Approach This New 401(k) Frontier
Advisers need to establish clear frameworks to address client interest, navigate risks like volatility, and ensure they meet their fiduciary responsibilities.
-
3 Niche Oil and Gas Investments for Next-Gen Wealth BuildersLesser-known segments of the oil and gas sector present unique opportunities for next-gen investors and family offices, as long as they're vetted thoroughly.
-
How to Avoid Being Buried by the Tax Avalanche in Retirement: Tips From a Wealth AdviserAll that cash you have in tax-deferred accounts could launch you into a higher tax bracket when you start withdrawals. It's time to protect your income.
-
I'm a Financial Adviser: This Is the Real Secret to Retirement SuccessFor real retirement security, forget about chasing returns and focus instead on the things you can control: income, taxes, risk-taking and decision-making.
-
Is Your Retirement Plan Based on Social Security Fact or Fiction?One in two Americans don't know much about Social Security — and some are basing their retirement on mistaken beliefs. It's time to separate fact from fiction.
-
Are You Investing to Score Points or Make Money? Cautionary Tales From an Investment AdviserHave you become numb to risk? Is your brokerage app or website fueling your desire to trade? An investment adviser explains why it always pays to be cautious.
-
Are Roth Conversions for Retirees Dead in 2026 Because of the New Tax Law?The OBBBA's permanent lower tax rates removed the urgency for Roth conversions. Retirees thinking of stopping or blindly continuing them should do this instead.
