Thursday, April 5th, 2012 | Caren Levine | |
Several years ago, like so many other women, I went through a divorce.
It’s a difficult time for all involved, but as a financial professional, the experience reminded me how important it is for women to ask questions and be involved in large and small financial decisions that affect the family now and into the future.
Most people don’t enter into marriage thinking of divorce any more than thinking they will become a widow. Still, women in this country must clear many hurdles to have a healthy financial future. They need to pay attention to personal finances—single, married or otherwise—because one way or another there is some likelihood they will be doing it alone.
The reality is that women live longer than men. They need to extend their retirement income far longer and the probability of needing additional dollars for long-term care assistance is a distinct probability. In 2010, some 40% of women over 65 were widows, according to the U.S. Department of Health and Human Services’ 2011 report on older Americans. Almost half of women 75 or older lived alone, 
and the older women’s median income is now a paltry $15,000, according to that same report.
Is that our future? That is not what I want for my daughters (Meredith on the left and Morgan on the right) or anyone else’s daughters.
So in addition to asking questions and taking notice, in my opinion, here is some food for thought for the next generation of women who are married or just thinking about it.
Bank accounts: Sharing joint accounts may help to dissolve any mysteries about where and how family income is spent. Many couples decide to split expenses evenly, but seriously consider having the higher wage earner pay the larger portion of the bills. And do consider carving out your own savings account in addition to any joint responsibilities you may have.
Prior debt: Will each spouse be responsible for the debt the other incurred before the marriage, and if so, to what extent? Keeping the indebted spouse’s prior debt separate will help ensure the other spouse’s property remains out of reach of creditors.
Retirement: Saving enough for retirement should be a major financial objective for women. Women often spend more time out of the workforce than men as a result of caregiving responsibilities, and because of this, they are less likely to have pensions and full Social Security benefits. According to the U.S. Department of Labor, women average 12 years out of the paid workforce, primarily for caregiving duties. When they do work, women, on average, earn 80 cents for every dollar earned by their male counterparts.
Insurance: Disability insurance can provide financial protection in the event you are unable to work because of an accident or an illness. The benefits from these policies can help you pay your bills. Similarly, life insurance can help provide a measure of financial security upon death by providing funds for children to attend college or keep up with a mortgage payment.
Don’t be stuck in the dark about your financial future. Make good choices now.
Did you know that for women 65 and older Social Security represents two-thirds of their income? Without Social Security, an estimated 58% of widows (age 65+) would live in poverty, according to a 2010 U.S. Congress Joint Economic Committee report. With inflation and other economic pressures, women who are relying on Social Security income in retirement may be faced at some point with choosing between food or medicine, rent or car repairs, or a myriad of other financial dilemmas.
Did these women envision such a meager future? Probably not. More than a few probably wish they had understood money matters better or actively invested for retirement.
You have the power to change your future by being aware what kinds of situations influence your ability to save for your retirement and by taking proactive steps now to prevent problems in the future.
Know that these factors will influence your ability to earn, save and not outlive your money in retirement:
Women spend on average 12 years out of the workforce. Often this is due to women taking on caregiving responsibilities—for children or adult family members. That means they have 12 fewer years than men during which they are putting money into their retirement funds.
Women live longer. On average, they live five years longer than men: 80.5 years versus 75.5 for men, according to the Centers for Disease Control 
and Prevention. But they may actually spend a decade or more on their own, due to divorce or widowhood.
Women face an earning gap. Women earn just $0.78 for every dollar that men do, according to the Government Accounting Office. And the gap is even larger for women of color.
Here are some areas where you can be proactive about ensuring a financially successful retirement:
Make sure you are getting paid what you are worth at work. Some women are reluctant to negotiate a better salary. Don’t worry that it will seem too aggressive; men do it all the time. It takes confidence and probably a little research to affirm your professional worth with your boss, but you need to do it.
Don’t equate a rich spouse with a retirement plan. Remember, only fate knows where that spouse and that money might end up someday.
Make sure you have a plan in place. The smartest move is to sit down with an advisor who can walk you through what you may need now, such as life insurance (for both you and your spouse, if you’re married), disability insurance and a solid investment strategy for your retirement. As you reach your middle years, long-term care insurance becomes an important consideration so you don’t destroy your retirement nest egg, should you or your spouse need care.
Preparing for a sound retirement requires focus, patience and dedication. But most importantly, it requires you to take that first step. I urge you to do it now.
Tuesday, March 13th, 2012 | Jack Chiasson, CAE | |
This is a very personal post, but one that I feel I need to share.
I lost my younger brother a little while ago. Chris was a financial advisor for his entire (and entirely too short) professional life, and he did what all advisors do: He encouraged people to plan for the future and to think about what would happen if something happened to them. He was very successful, but I suspect that, like the physician who makes a terrible patient, he didn’t always take his own advice.
Oh, sure, he had life insurance, a 401(k) plan and a college fund started for his young son, but there were a lot of things he 
didn’t do. I’m sure he thought he had lots of time to take care of the simple details. He didn’t. He was just 44 when he died.
So, as a combination public service and a memorial to my brother, I offer the following.
First and foremost: If you don’t have a will, you should. Even if you only use one of the many simple wills available at your local software seller, do so. If your needs are more complicated than what these will accommodate, call your lawyer today. It’s absolutely worth the money. Oh, and make sure someone knows where it is!
Second, make a list of each and every insurance policy you own. List the name of the policyholder, the face amount, the policy number and any other pertinent details. Also, indicate how your survivors will be able to collect on that policy: list the phone number for the claims department for each policy, and provide a general list of what will need to be submitted with the claim.
On that same list, provide all of your bank information: savings, checking and other accounts. List the name and location of the bank(s), the account number(s) and a phone number for each establishment. As with the insurance policy information, give a brief description of what your survivors will have to do to get to the money.
Next, if you have your own financial advisor, a lawyer, a stockbroker, an insurance agent, or any other type of advisor, list their names and contact information as well. These are the people who know where your assets are, and can help guide your survivors at a time of great distress, helping to make the worry about “What am I going to do now?” much less stressful.
The next part is really hard—to read, to write and to talk about with people you love.
Have a conversation with your spouse/partner/significant other, with your kids and/or grandkids about your thoughts on the end of your life. Do you want to be buried? Where? Do you already own a cemetery plot? Add the location and other information to your list. Would you prefer to be cremated? What would you like done with your ashes? Do you want a particular kind of religious service? Tell someone all of these things, and make sure that it’s written down somewhere, preferably in the same location as your will and the lists described above.
Consider preplanning the end of your life. It’s not fun or glamorous—and it’s certainly not pleasant to think about, but make it simple for your family to continue to enjoy the life that you have been able to provide for them.
I’m sure that by now you can guess all of the things that my brother didn’t do. Perhaps even more than wishing him back with us, I wish he had taken his own advice. It might have been possible for his family to more easily cope with the loss of their husband and father if they didn’t have to worry about what the future—especially the very near future—holds for them financially.
We are lucky enough to have some of the top insurance agents and financial advisors at our disposal (they form our board of directors). So we thought we’d put them to work for you. We asked them, “What is your best piece of advice to help someone get their financial life on track—or back on track?” and here is what they had to say:
The economy has been tough on almost every one. We have had to cut out things here and there. Take a look at what you spend on a daily and weekly basis, keep a diary of expenses. You might be surprised at how much money you might save if you took your lunch to work a few days a week or made your own coffee in the morning. Then create a proper budget. Include in that budget how much you could save for the things that are really important. And remember to review your budget regularly to keep yourself on track. —Cindy Gentry, CLU, ChFC, LUTCF
Save … save … save! No matter how difficult it is in today’s world, it’s critically important that you begin and maintain a steady savings program—even if it is just a small amount for now. No one has ever regretted saving money. —Ronald B. Lee, CLU, ChFC, CLTC
We spend more time planning a vacation than we do keeping our financial lives on track. Get your “house” in good financial order with a budget by keeping track of your monthly expenses compared with your monthly income. Your goal should be to have money left over at the end of every month. If so, you are on the road to financial fitness. There will be bumps along the road, but as long as you maintain a balance of spending limits with the understanding of your income, and knowing that you cannot spend more than you earn, you’ll be back on track in no time. —Robert N. Garneau, CLU, ChFC
It’s time for a “financial physical.” You may “feel” financially alright, but upon further analysis by a qualified professional you may determine you are jeopardizing your financial future. You get a physical check up to feel confident you are not putting your health at risk. Doesn’t it make sense to give the same respect to your financial health, too?” —Clarke Langrall, Jr., CEPA
Many people make plans for their vacations in the beginning of the year. How about spending a little time making plans for your retirement or what happens to your kids if something happens to you? —Michael L. Weintraub
Do a budget! Most folks don’t know how much comes in and how much goes out. So, they can never get a handle on how much “discretionary” income they have to … spend, save, invest or buy insurance. If you don’t know where you are, you’ll never be able to figure out how you can go anyplace else! —Brian H. Ashe, CLU
Have a financial advisor review your tax return. She can advise you if a tax-deferred annuity would help reduce your taxes, for example. She can also give advice on life insurance loans and/or dividends, and answer questions such as: Are you maximizing your policy’s tax advantages? and Would a long-term care policy benefit you and your heirs? —Patricia L. Krarup, CLU, ChFC, MSFS
Let us know which piece of advice resonated most with you.
During open enrollment at work, we’re faced with the often confusing task of evaluating the benefits options our employers offer. Often, these benefits can change from year-to-year, complicating things even more. While you may be tempted to just let your previous benefits selections “roll over,” it’s critical to take time to review and understand what’s being offered and make any necessary updates to your insurance and other plan selections to meet the changes you have—or will have—in your life.
According to a recent survey conducted by LIFE and LIMRA, among the top financial concerns of Americans today are
- having enough money for a comfortable retirement
- paying for medical expenses
- being able to support themselves if they become disabled and unable to work
Open enrollment gives you the perfect opportunity to review your financial and insurance plans to make sure you have a foundation in place to help prepare for these types of potential expenses. These eight tips will give you a helping hand:
1. Choose your options carefully. Barring a major life change, such as marriage, divorce or the birth of a child, most benefit plans do not allow you to make changes to your coverage elections more than once a year, during open enrollment season. Be sure to consider your plan options carefully so that the choices you make meet your current needs.
2. Don’t assume that doing nothing will maintain your status quo. Allowing your benefits options to just roll over from one year to the next can seem like an easy decision when you’re faced with numerous open enrollment choices. But not taking the initiative to evaluate new or changing options could mean missing out on plans that could potentially save you money or could leave you in a program that no longer meets your needs.
3. Consider a high deductible health plan. Review your health plan options to see if your employer offers a high deductible health plan. These plans can be less expensive if you don’t plan to use your coverage often. However, you’ll want to take the money from your lower premiums and save it. If you should incur medical expenses, you may need that money to pay for them because you will have to pay a larger deductible up front. If you don’t have high medical expenses, you will have saved that money.
4. Look for cost-effective ways to increase your life and/or disability insurance. Many companies offer their employees group life and disability insurance. Sometimes employers will provide a basic life or disability insurance benefit at no cost to their employees. They may also offer an option to supplement coverage through a voluntary payroll deduction. It is important to review the options available to you to maximize any opportunities where you may be able to increase coverage in a cost-effective way.
5. Re-evaluate the amount of insurance coverage you need. If you’ve recently had a child or been married or divorced, it is important to update your insurance policies to account for these life changes. When the number of people who depend on you changes, it’s likely that your health, life and disability insurance coverage will also need to change. The LIFE website offers several calculators, including a Life Insurance Needs Calculator and a Disability Insurance Needs Calculator, to help you determine how much coverage you should have.
6. Make sure your beneficiary information is up to date. Marriages, divorces, births or adoptions can often be overlooked when people are reviewing their policies and the beneficiaries designated for things like life insurance or a 401(k) account. You’ll want to be sure that your beneficiary information is updated based on your current life situation to avoid any confusion or potential problems during the claims process.
7. Calculate your out-of-pocket healthcare expenses. As health-care costs continue to rise, it’s important to consider taking advantage of a flexible spending account (FSA) or health saving account (HSA). These types of accounts allow you to set aside a portion of your pre-tax earnings to pay for qualified expenses, such as doctor co-pays, prescriptions, daycare or even mass transportation and parking—depending on the type of account being offered. If you currently contribute to a FSA or HSA, you may want to increase or decrease your contribution based on your current needs.
8. Ask for help. Talk to your human resources representative or your company’s employee benefits advisor about your benefits options during open enrollment. You’ll also want to review your options with your spouse—some benefits packages are better than others, so you may want to consider being added to your spouse’s plan as a dependent or vice versa.
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and the older women’s median income is now a paltry $15,000, according to that same report.
