It is a known fact that women spend a good deal of their lives caring for others. This doesn’t change in retirement. Because women have a longer life expectancy than men, they often find themselves in the driver’s seat when their husbands fall ill. Not only does caring for a spouse in your golden years sap your energy, it can also drain your finances. If illness or medical costs draw down his IRA and your joint investments, it could leave you with fewer assets than you anticipated.
Some strategies to combat this outcome:
- Make sure you fund your own retirement throughout your lifetime. Even later in life when only one spouse is working part-time, you can use either your own or your husband’s wages to fund a Roth IRA or a traditional IRA.
- Consider purchasing long-term care insurance. Since July 17, 2007, all policies must offer home health care, making it more likely than ever that you will use the policy. Premiums go up considerably after age 60, so it is important to undergo the underwriting process early when good health translates into lower costs. What many women don’t know is that your husband’s long term care policy actually protects his assets so they are available to care for you. These policies have another hidden benefit called care coordination. What this means is that the insurance provider will assist in sorting through the myriad of health providers.
- If you are eligible for Social Security on your own record and you are older than your husband, consider drawing Social Security when you are 62 even though the amount is lower than ideal. When you are at your full retirement age, you can then switch to 50% of your husband’s Social Security benefit if that amount is more than yours. Many women don’t draw benefits early in this situation, assuming they will take a discounted amount for life.
- Make sure some of your investments are positioned for growth. In the past few years, Social Security benefits have not increased for inflation and it looks like the next increase will be negated by increases in Medicare. Most pensions also do not have cost of living increases. To keep pace with inflation, you need to have growth investments, not just income investments, to make sure you don’t outlive your money.
- Start planning early and make sure you understand the finances in your marriage. If your husband falls ill, you won’t be in the frame of mind to understand how bills are paid or where financial statements and investments are housed.