There are as many kinds of mothers as there are different kinds of families. For every mother who handles family financial decisions alone, there are others who work with a partner. There are mothers who work, and mothers who are retired. And, just as importantly, there are mothers who see their lives change over time, just as you may have seen your mother transition from looking after you to taking a job outside of the home, or even running a business.
That being said, here are some helpful financial tips that mothers may want to consider.
Are you prepared for a 20-year retirement? How about a 30-year or even 40-year retirement? Don’t laugh; it could happen. Social Security Administration projects that about 33% of today’s 65-year-olds will live past 90, with approximately 14% living to be older than 95.1
Start with good questions. How can you draw retirement income from what you’ve saved? How might you create other income streams to complement Social Security? And what are some ways you can protect your retirement savings and other financial assets?
Enlist a financial professional. The right person can give you some good ideas, especially one who understands the challenges women face in saving for retirement. These may include income inequality or time out of the workforce due to childcare or elder care. It could also mean helping you maintain financial equilibrium in the wake of divorce or the death of a spouse.
Invest strategically. If you are in your fifties, you have less time to make back any big investment losses than you once did. So, protecting what you have is a priority. At the same time, the possibility of retirement lasting up to 30 or 40 years will likely require a growing retirement fund.
Consider extended care coverage. Women have longer average life expectancies than men and can require significant periods of elder care. Meanwhile, some single mothers remain unpartnered, and must prepare for these costs as well. Medicare is no substitute for extended care insurance; it covers only a few weeks of nursing home care and may only apply under special circumstances. Extended care coverage can provide huge financial relief if a need arises.1
Claim Social Security benefits carefully. If your career and health permit, delaying Social Security disbursements is a wise move. If you wait until full retirement age to claim your benefits, you could receive larger Social Security payments as a result. For every year you wait to claim Social Security, your monthly payments get about 8% larger.2
For married mothers, it’s wise to retire with a strategy and prepare for a time when you might survive your spouse or partner. As you face retirement, a financial professional who understands your unique goals can help you design a wealth management approach that can serve you well for years to come.
A successive investment policy can be determined. A female head of household may want (or need) to take a different investment approach than the one stated in a couple’s investment policy statement (IPS). This approach needs to be one she is comfortable with, but it must not be so risk-averse that it jeopardizes her potential to sustain her standard of living in the face of inflation.
Sufficient insurance and a thoughtful estate plan need to be in place. If a spouse dies, the death benefit from a permanent life insurance policy may ease some of the financial pressures that follow. Up-to-date beneficiary designations, trusts, and other estate planning mechanisms may help assets transfer from spouse to spouse and within the family without contention or undue delay. A good estate plan clearly defines the steps of the asset transfer process for a surviving spouse and other heirs.
An asset map should be prepared for a surviving spouse. Some surviving spouses must search for vital financial documents because a deceased spouse left them in an obscure location. At other times, she is left with only a hazy understanding of how many accounts there are, how they are titled, and how to address the requirements of asset distribution or transfer. Each spouse should have a copy of a document (or access to an online or brick-and-mortar vault) where this information is kept. This is the information from which much of a surviving spouse’s financial future may be planned.
With a clear understanding of where she stands financially, a mother may evaluate her investment and wealth management options and take steps toward the next phase of life with some confidence. Happy Mother's Day to all you wonderful moms!
Jeff Spitzmiller is the CEO of Ohana Wealth & Life Planning based in Cincinnati, OH. Ohana specializes in life and financial planning for professionals in the healthcare and university fields. The firm is an independent financial advisor and a fee-only fiduciary. Jeff and the firm also enjoy volunteering and giving back to the local community. You can reach Jeff at email@example.com.
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