Are Women Really Financially Disadvantaged?

Fellow MoneyWatch blogger Robert Pagliarini had an interesting post the other day about how women facing divorce are at a significant financial disadvantage. I am an avid reader of Your Other 8 Hours; it's always full of thought-provoking and useful advice. But this post rankles just a bit. There's a wiff of of women as hapless 50s-era supplicants to their breadwinner husbands.

Women Baking Bread or Bringing it Home?
In fact, women are increasingly emerging as the primary breadwinner in many marriages.

A recent Pew report on the New Economics of Marriage (PDF) reports that the percentage of wives who out-earn their husbands has risen from 4 percent in 1970 to 22 percent in 2007. That trend has no doubt accelerated in the wake of the recent recession as men have been hardest hit by layoffs; in January the number of women in the workforce exceeded the number of men for the first time ever.

Yes,I am well aware of the gender wage discrepancy. But I read with great interest a recent New York Times Economix blog post that explained the gap is closer to 6 percent, not 20 percent, when you control for all sorts of issues ( career path/experience). More good progress.

Tangible Advice for Stay at Home Moms Now that said, stay at home moms can be vulnerable. Robert is absolutely right that women who are not currently in the work force need to keep their resume and skills humming so they have the flexibility to jump back into the job pool if and when they want. But the advice that stay at home moms should "know their finances" by sitting down with their husbands once a month to review the money stuff, reads way too passive for my taste. Really? All wives need to do is review what their husbands have taken care of? How about being at least a 50-50 partner in making those decisions? If women don't see the value in being an active decision-maker in their financial security, then they bear plenty of responsibility for any future financial disadvantage.

I'd argue women should in fact drive the retirement planning. For purely actuarial reasons. Women live longer. (Check out Steve Vernon's recent post on longevity ) Moreover, older women are more than twice as likely to live alone. According to the AARP 48 percent of women over the age of 75 live alone, compared with 22 percent of men.

Insisting on stuffing the 401(k) is an obvious retirement planning need. Stay at home moms should also make sure they are taking advantage of a Spousal IRA. Typically you need to have earned income to contribute to an IRA, but non-working spouses are eligible for an IRA based on the income of their spouse. That's $5,000 a year ($6,000 if you are at least 50 years old) that a stay at home mom can tuck away each year, in her name.

When to take Social Security is another big area where women -- especially those who have taken time out from a paying job -- would be wise to drive the decision-making. Lynn Brenner has great tips for how married couples can maximize their Social Security benefits.