Yahoo Finance Many Women Will Be Single in Retirement. Are You Ready?
Regardless of whether they were married earlier in life, many women will be single at some point during their retirement years. Over half (54 percent) of women age 65 and older were single in 2014, according to U.S. Census Bureau data. Those women may have always been single or may be widowed or divorced.
"In any of these situations, women need to be ready to take charge of their retirement," says Mary Jo Herseth, senior vice president and national head of banking for BMO Wealth Management. Here are six ways women, especially those who are currently married, can prepare for the day when they have to manage their retirement alone.
[Read: How Married Couples Can Max Out Their Retirement Accounts.]
Double check beneficiary information and legal documents. The last thing any new widow wants to hear is that she isn't named as the beneficiary on a life insurance policy or that her spouse's money is otherwise tied up. John Eikenberry, president of Eikenberry Retirement Planning in Sidney, Ohio, says it's important to update legal documents regularly to reflect current assets. "The legal documents have to work together with the assets," he says.
What's more, women should have an open conversation with their husbands about how assets in a trust will be managed. "Many times, we've seen the woman has no control," Herseth says. Whether it's out of a belief that their wives are incapable or uninterested in managing money, Herseth says some men choose to assign control of a trust to a friend or lawyer instead of the spouse.
Get to know your financial planner. To help avoid situations like having a trust controlled by a third party, women should take an active role in their household's finances. That includes going to meetings with financial planners and asking questions about assets. After a death or divorce is "not when they want to be learning about the family finances," Herseth says.
"The biggest concern I have is with [older] widowed women," says Chad Slagle, president of Slagle Financial in Edwardsville, Illinois. "They are from that old tradition where the men take care of everything." However, that tradition needs to change if women are going to be prepared to manage their money alone one day.
[Read: 5 Reasons Women Need to Save More for Retirement Than Men.]
Have a plan for long-term care. Women also need to have a plan for their long-term care needs in retirement. "You think your children might take care of you, but the longer you live, sometimes you don't have the people you think taking care of you," says Tiffany Welka, vice president of VFG Associates in Livonia, Michigan. Rather than trust children will be up for the challenge of caring for an elderly parent, women should consider buying long-term care insurance or setting aside assets to pay for these costs.
Make the most of spousal benefits. For those who have always been single, the best option to increase Social Security payments is to delay the start of benefits. However, those who were once married have other choices. "If you go into retirement as a couple, there's a sense of someone being able to care for you," says Marsha Harris, founder and president of Unified Wealth & Retirement Planning in Fort Wayne, Indiana. More importantly, a marriage usually means two Social Security checks and the option to coordinate benefits to ensure a surviving spouse gets the largest amount possible.
Create guaranteed income streams. Harris says there are two types of money in retirement: "I hope so money" and "I know so money." In the former category are assets such as IRAs and 401(k)s, which have values that can vary with the markets. The latter includes Social Security and other income sources that can be reasonably counted on to remain steady throughout retirement. "A lot of ladies are not real big risk-takers," Eikenberry says. "They are conservative." As a result, they may leave their "I hope so money" in investments that won't earn enough to last through retirement. To compensate, women may want to look into immediate annuities, which offer a guaranteed stream of income and peace of mind for the years to come.
[Read: How (and Why) Men and Women Retire Differently.]
Plan for a long life. A woman turning 65 today can expect to live until an average of around age 87, according to the Social Security Administration. That means retiring women need to be smart and frugal with their spending. "I have seen a few people who have dramatically changed their retirement for the negative because they spent too much too soon," Welka says.
When planning a financial strategy for retirement, Slagle asks his clients which day they spend the most money. "They say Saturday," he says. "When you retire, every day is Saturday." In other words, it's easy to fall into the habit of spending too much money every day of the week.
However, women who avoid that habit -- and follow the other tips listed above -- may find they are in good shape to live out their retirement comfortably, whether or not they have a man by their side.
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