How Women Can Avoid Common Risks to Their Financial Security

Women who don’t take an interest in how their investments are managed and how their household bills are paid face greater risks to their long-term security, personal autonomy, and legal preparedness than those who do.

Why?

Women typically outlive men. Unless they have a trusted heir or financial professional looking out for them, this means many will eventually need to manage their own investments.  Worse yet, this often begins at a time of high stress. They may be experiencing financial and other challenges in caring for an infirm husband, or they may be newly widowed. Taking on investment management at that time is an invitation for financial harm or worse.

This article explores the risks women face if they don’t get involved in understanding their finances and gives several suggestions on how to prevent this.

Let’s start with two stories:

Story 1

Widow Grace came to us about two years ago. Her husband had recently passed away. She knew she had enough money to live comfortably, but was not at all knowledgeable about the full scope of the investments her husband had been managing for years. After months of digging, it was discovered that her husband had many more accounts than she knew of and that her financial assets were multiples of what she thought they were.

Story 2

John and Joan also came to us two years ago. John was ending a very successful career and had just sold his company. He was also experiencing signs of early dementia and couldn’t remember the full extent of his financial holdings. Again, after months of digging, what was a complicated maze of accounts has been simplified into fewer, larger accounts that are easier to access and understand.

Risks Women Face When They Don’t Control Their Money

Women who are not active in managing their investments and family finances face some unique challenges, including:

Knowledge gaps

If a spouse suddenly dies or is incapacitated, women may find themselves at a loss as to their financial situation. Ask yourself the following questions:

• What kind of accounts do we have?
• Where are they?
• Who manages them?
• Can I access them?
• What are the passwords?
• Do we have up-to-date estate plans?
• Do we have any debt I don’t know about?
• What is our insurance situation?
• Do we have a safety deposit box? Where is it? Who has the key?

If you can’t answer these questions, it’s time for a basic sit-down with your spouse to ask them to gather the information and put it in a place that’s easily found in case of emergency.

Not prepared for unexpected responsibilities

Lots of investors today, maybe your spouse, are “do-it-yourselfers,” meaning they have an account or accounts at a discount broker such as Charles Schwab, Fidelity, or Vanguard and have been making their own investment decisions for years. In the event of a sudden death or illness, this could become your responsibility. Can you even access the accounts? And if so, are you prepared to judge why you own this stock, that bond, or these funds? Not knowing the answers may leave women vulnerable to making costly financial errors.

Exploitation

Even worse than making costly financial errors is falling prey to an untrustworthy financial professional. A lack of financial management knowledge increases the risk of being at best overcharged for some advice, and at worst, sold an investment inappropriate for your situation. This could even come from family members who are looking out for their own interests more than yours. A good question to start with would be to ask anyone offering you help whether they are a fiduciary and whether they benefit in any way from the help they are offering.

The widowhood penalty

Since many couples rely on multiple sources of income in retirement, the sudden death of a spouse may come with a change in income due to events such as changes in Social Security or pension payments. Although not much can be done about this, it is better to know it will happen ahead of time rather than being surprised by the sudden drop in income and the lifestyle changes it might force.

Gaining Control Over Your Finance – and Your Life.

Even if you have played a passive role in your family’s investments and everyday spending, it is never too late to take control and feel more secure. Here are some tips to get you there.

Start the discussion

It may come as quite a surprise to your spouse that you are suddenly interested in investing and your family finances. Introduce the subject carefully and focus on your desire for mutual security. You can care for him financially if he becomes incapacitated, and you can care for yourself should the same happen or if he suddenly passes away.

Document all accounts

Ask your spouse to work with you to document all bank and brokerage accounts, insurance policies, and estate planning documents, and how to access them. It can be a great first step toward understanding your family’s overall financial situation.

Get access

Request access to all investment accounts, insurance policies, and wills. This will ensure that you have funds available should something happen to your husband.

Start learning

If you haven’t been involved, you might not know much about managing family finances and investments. If so, it’s time to improve your financial literacy. Start slow with basic topics like bills and budgeting. Then move on to more critical topics for your future, like the basics of investing and retirement planning. There are many, many sources of information on all subjects, personal finance, and investing. Check out our guide.

Stay informed

Getting access to family finances isn’t a one-and-done process. It’s an ongoing one. Both partners should be aware of where assets, accounts, and policies are, their value, and their overall financial plan. The best way to do this is through regular meetings to review financial goals and your current situation.

Seek professional support

Your husband may be resistant to the concept, but one of the surest ways to gain control over your money is to bring in someone who can serve as an advocate for you. A financial professional can be as involved in your investments and personal finances as you and your husband prefer. Think of them as a coach, partner, or sounding board, there to help you when you might need it most.

Get excited!

Women must think of their finances as something they care about, not as a chore to be avoided until necessary. Turning investing and family finances into something you genuinely care about will help you stay on top of them. For many women, the benefits to them and their families in the future are well worth the time and expense of learning and gaining control of them.

The Final Word on Women and Gaining Control Over Finances

For many women, allowing their husbands to exclusively manage their money is a comfort.

Nothing could be further from the truth.

Staying uninvolved leaves women incredibly vulnerable, now and long into the future.

Let the information in this guide serve as a starting point for a better understanding of your investments and household finances. Take action to gain greater knowledge and control of them. You may feel unsure at first, but you will have greater security and well-being in the long term.

Get started today by contacting the professionals at Chase Investment Counsel. We have a long history of helping people in your situation plot a path to a more secure future.