Husbands: Poor Retirement Planning Could Lead to Desperate Housewives

(MoneyWatch)  Poverty among widows is a real problem in the United States. According to a report from the Women's Institute for a Secure Retirement, almost two-thirds of all women age 75 and older are widows. And the rate of poverty for women age 65 and older is over 12 percent, which is 80 percent higher than the comparable rate for men in that age range. Social Security -- hardly a generous income -- provides 58 percent of income for widows age 65 and older.

Let's take a closer look at how this can affect your retirement planning decisions if you're part of a married couple.

Most married women can expect a five-to-ten-year period of widowhood at the end of their lives. The reasons? Simple math: Since most men marry women who are two to four years younger than them, and women live, on average, three to five years longer than men, it's inevitable that there's going to be more women than men who survive into their later years.

And here's a situation that, unfortunately, happens all too often to these older women. The husband declines in health near the end of his life and the couple ends up spending lots of money on bills for his medical and long-term care. The wife also usually steps in as the caretaker. When the husband dies, the wife is exhausted, both emotionally and financially. And who's left to take care of her?

With some thoughtful planning, however, you don't need to exhaust your savings to pay for the husband's care. Married couples should make their retirement planning decisions with the goal of leaving the wife in good shape financially after the husband dies. To help you do that, here are some tips:

• First, do the math to determine how much retirement savings you need to generate a reliable lifetime income. Half of all older workers don't even do the math, and as a result, they usually retire with inadequate savings to last for the rest of both of their lives.
• If the husband has the higher earnings history, he can max out his Social Security benefits (and hence the widow's benefits) by delaying his start date as long as possible.
• Be very cautious about drawing down 401(k) accounts and retirement savings. Your goal should be to make these resources last as long as one of you is still living.
• Have a strategy for addressing the threat of high expenses for long-term care.
• If the husband has a substantial benefit from a defined benefit pension plan, take the joint and survivor annuity. In particular, resist the temptation to take a lump sum payment in lieu of an annuity, if that option is offered, since it's common that retirees outlive their lump sum payments.
• Both the husband and wife should support and encourage each other in their efforts to improve their health.
• Be very careful about taking on debt that will still be outstanding in your later years. Arrange to pay off your mortgage, either by the time you retire or well before the age when the husband might pass away.

I believe most men are simply unaware of the impact that their retirement planning decisions will have on their wives. Most men would want to make sure their wives will be secure after they die, and they wouldn't make conscious decisions that could jeopardize their wives' future well-being.

By carefully planning for your future -- a future that involves each of you -- you'll have enough funds to take care of both of you.

P.S. This post addresses the retirement planning decisions that married couples face, in order to help prevent poverty among widows in retirement. Single and divorced women have similar challenges, and I'll address these in a future post.

Image from iStockphoto contributor JJRD
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