Jay Jackson
Chairman & CEO
When I was on vacation with my family earlier this year, we met a couple looking to retire and the husband was asking me about potential new investments. After a pleasant exchange, we parted ways, but a few minutes later, the wife came back, expressing concern about their retirement plans.
She told me that her husband, the eternal optimist, was interested in exploring trendy – but also risky – financial investments, while also suffering from several chronic conditions that she worried will shorten his life expectancy. She told me that she was concerned she would outlive her husband and she wouldn’t have the financial resources to support herself in the future.
Unfortunately, her concerns are neither uncommon, nor unfounded. Too many women are left in the dark about their family’s financial future, and are not even equipped with the most basic facts like where the family’s assets and accounts are located.
Our partner Dr. Joe Coughlin from AgeLab published a post last year on this very topic, calling for honest conversations between partners and among financial advisors about planning for “two retirements.” And with the recent market volatility, more Americans than ever are worried about their financial security in retirement.
Statistics show that, on average, women live about six years longer than men, a disparity that has increased by a full year since just 2010. Due to this life expectancy gap, the surviving spouse often faces substantial expenses from their partner’s end-of-life medical care. End of life medical treatment can many times total hundreds of thousands of dollars or even millions of dollars of unexpected expense. At the same time, women traditionally have far less in retirement savings, the result of lower pay, breaks in careers for motherhood, and fewer promotions. And simultaneously, women tend to retire earlier, putting them in an even more precarious financial situation later in life.
This longevity gap has profound implications for financial planning. A woman who outlives her partner will face additional years of living expenses, rising healthcare costs, and the possibility of managing finances alone. Without proper planning, these years can bring incredible stress and financial instability, with more than half of women over the age of 65 (52.6%) economically vulnerable. This compares with 41.9% of men who are economically vulnerable.
It’s natural for couples to avoid talking about topics like death, health, and maybe more than anything else – finances.
But addressing long-term financial planning is a conversation that can reduce stress in relationships and encouraging couples to have candid, clear-eyed conversations about their individual health, life expectancy, and financial priorities is an act of care and responsibility.
Though it may seem obvious, it’s crucial to start with the basics:
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What is our overall financial picture?
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What is our retirement budget and how will expenses be managed?
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Where are our accounts held?
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Who is the point of contact for managing our money?
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What is our disbursement schedule and will it support our individualized lifespans and health needs? How will it change if one of us passes away?
What these conversations look like for each couple will of course vary based on unique circumstances, such as their age, health, and financial goals. Alongside 401ks, real estate, and other retirement accounts, there are additional tools like life insurance, long-term care insurance, and other strategies that are designed to provide income for extended retirement years and are worth exploring to help ensure the long-term financial stability for both partners.
Ignoring these conversations doesn’t just put the surviving partner at risk – it can also undermine the couple’s shared vision for a secure and fulfilling future, and add perhaps to the most toxic ingredient in any relationship: financial stress.
Ideally, these conversations happen early in a marriage. However, the most important fact is that they happen at all. It is never too late to have honest, transparent conversations about your shared financial future.
