Consumers Credit Union presents its third in a six-part series: “Why Women Need To Save Differently”. Follow each week for more tips designed to meet the needs of women and their finances.
Life expectancies continue to climb and medical advancements bourgeon, but women still find themselves widowed at an earlier age than men – more than 75% at an average age of 56. A startling statistic, it’s important for women of every age and income range to plan and prepare accordingly.
- Start saving early – and as much as possible
- Stay involved with your finances
- Be insurance savvy – know your life, health, auto, and homeowner’s insurance policies
- Keep an audit of your home and document purchases and repairs
- Have an up-to-date will
- Make no irreversible decisions shortly after your spouse’s death
- Plan for the future with eyes wide open
Saving for the future — start early, save greatly
Every woman should start a savings plan for herself early in life. And if you’re married, the earlier you and your spouse begin saving, the larger your nest egg will grow. Interest, when added to your principal balance, begins to compound and take flight. Try saving 15% of your pay – and if you or your spouse has a 401(k) plan available, take advantage of its many benefits, like tax-deferred earnings. In addition to retirement funds, strive for a six-month savings cushion in the event of an emergency or untimely death.
Know your finances
Be knowledgeable and stay current on all financial information specific to the family, including pension plans, bank and credit union accounts (checking and savings), mutual funds, social security statements, and retirement benefits. Know how and where documents can be accessed in the event of your spouse’s death. As for medical insurance, know whether you’re covered as a dependent and what happens to your coverage if your spouse should die. Have easy access to files referencing policy information, group numbers, and contact phone numbers.
Is your financial life in order?
Ensure that you have a will and it is up-to-date. Also, who is the administrator? Stay informed about all property owned jointly or individually. Be proactive and make copies of titles to all of the vehicles, as well as current auto insurance information. And, don’t be insurance poor. Take out coverages that make sense for you, your family, and home. Plan for future needs with life insurance – this will protect you in the event of loss of income due to a death.
Says Lonnette Harrell, author of What Widows Need To Know:
“Many husbands wrongly assume they will outlive their wives, and therefore do not make the necessary financial provisions. Have all the information you need to know, in advance.”
Do an annual home audit
Though you walk the rooms every day, it’s essential to discern the exact condition of your home – do an annual audit for things like the age of your air conditioner and furnace, the type of wiring your house has, the age of the roof and the water heater, and other points pertinent to your home. Document major purchases and file the information where you can easily find it. When facts are accessible, things won’t seem so overwhelming and decisions can be reached during a time of crisis.
What about the house?
If you become widowed or alone, it’s important to decide and plan for future living arrangements. Can you afford to stay in the house you live in now? Would you want to stay? What will be favorable to your living needs as you grow older? Consider alternatives such as living with relatives or in an apartment, and for those nearing retirement-age, assisted living or retirement communities are possibilities. Set a sensible strategy ahead of time.
Most importantly, do you have enough funds available through life insurance, savings, or retirement to stay in your home and maintain it?
Be capable with bills and debt
It’s wise to know exactly where your household stands with bills and debt. Prepare a list of all credit cards and any outstanding debts – arm yourself with knowledge of all monthly bills, such as utilities, cable, water, sewer, mortgage, loans, credit cards, doctors, lawn maintenance, garbage, home and cell phone, car payments, etc. If you’re married, you and your husband should both know how to write checks and balance the checkbook, even if only one of you takes care of the finances regularly.
Know the other’s wishes
Difficult subjects tend to be avoided. But be frank with your spouse and know the other’s wishes if one of you should die. Talk about granting power of attorney, durable power of attorney, medical directives, and funeral requests. Also consider provisions for funeral services and other arrangements.
Preplanning gives you the ability to think clearly ahead of time – making it easier and less painful to make decisions during a crisis.
Schedule time to talk
As with every aspect of life, setting aside private time to discuss sensitive issues within your marriage is an excellent idea. Author Lonnette Harrell suggests scheduling time weekly, before doing something enjoyable, such as going to a movie, or out to dinner to discuss difficult issues. She adds:
With just a little preparation and planning, you can have confidence, that in the event of an untimely death, you will have the information that you need.
An excellent article by Lonnette Harrell:
Accel, Members Financial Counseling: