Double whammy when women become widowed

At 68, Nancy is a recent widow and a reluctant inductee to the family finance hall of fame, a realm previously relegated to her deceased husband.

She is just one of many women finding themselves dealing with the twin despair of losing a spouse and being unpleasantly surprised with the burden of financial planning. It had never crossed Nancy’s mind that she would have to manage the family finances all on her own, and she wishes she had taken the time to go through the numbers well before the personal tragedy hit. This scenario is unfolding in houses all across Canada, one that presents an opportunity for advisors to lend a helping hand in.

Women and money was the focus of debate at a BMO workshop held for clients and advisors in Toronto during September. Amy D’Aprix, a lifestyle expert, opened the talk by laying out some true or false questions.

Over half of boomer women have less than $10,000 in retirement savings. True.

The first year after divorce witnesses a woman’s standard of living drop by an average of 40%. Also true.

Each fact was met with audible gasps, giving shape to a typically fraught relationship women have with their money.

The problem, Dr. D’Aprix says, is the comfort level. Women are far less likely to get their hands dirty than their male counterparts, happily deputizing their husbands to handle the family finance.

This becomes increasingly troubling when you take into consideration the average age for widowhood: 56. This means nine out of 10 Canadian women will be in full custody over their financial fate at some point in their lives. Combine this with the fact that women still make just 83% of their male colleagues’ paycheque, and we have a potentially calamitous situation.

What’s more, “women are caregivers for other people too,” Dr. D’Aprix points out. Women are responsible for more than half of the heavy lifting when it comes to providing for aging parents. They are also likely to remain the primary caregiver to their children when a marriage goes bust. Considering the well-worn statistic that over 40% of marriages won’t make it to their 30^th anniversary, women have a greater responsibility both to themselves and to their dependents to maintain a healthy relationship with their finances.

“There is a powerful connection between how we feel about money and what we do with it. How we think about money impacts how we feel about it, and that in turn affects what we do with it,” says Dr. D’Aprix.

For some, it might mean updating their existing financial plans; for others, it might mean learning the basics.

She suggests advisors open up the debate by inquiring of the past. What kind of a household did you grow up in? Did your parents discuss money openly? What was the comfort level like? Did they spend or did they save? Do they share your concerns with you? Or were you largely shielded from financial woes? Was there a sense of need? Were there fights over money?

Most women would identify themselves as competent day-to-day financial planners. They are on top of paying the bills, balancing the cheque book, and the rest.

It is with retirement planning that most women tend to fall behind. Goals are set but never met. This is where advisors can step in and offer guidance on how to keeping on top of those RRSPs and RESPs.

The final Valhalla is estate planning. Many tread around this subject carefully, but the sooner it’s addressed, the better.

What else should advisors recommend? Have a conversation. This conversation can be with yourself, a loved one, or an investment professional.

Recurring themes in these conversations should help you draw up a personal action plan, one that includes everything from what matters the most to you in life, to how to address the power of attorney.

“Women have hang ups around money because they wrongly assume everyone knows more” than they do, says Dr. D’Aprix. “But it’s okay not to know what you don’t know.”