I was surprised when I learned that the average age of a woman becoming a widow in Canada...is 56. It's not the picture most of us have.
That's an interesting stat and one you need to be aware of if you are a married woman, as there is a high likelihood that at some point you will be alone. Here's another interesting statistic: According to a survey by Merrill Lynch, only 14% of women were making financial decisions prior to becoming a widow. Are you prepared? It's important for you to not stick your head in the sand when it comes to this potential reality.
According to the Broadbent Institute, 28% of single women seniors are living in poverty in Canada versus 24% for single males.
Why is this?
Women live longer than men. In Canada, the average life expectancy for a male is 80 and for a female, it is 85. There's a 50% chance that one member of a 65-year-old couple will live past 90 and it's highly likely that that person will be the woman.
According to a 2016 stat, there were 2 women for every 1 man in the over 85 categories.
Grey Divorce.
There isn't a lot of data on this trend in Canada, but, "according to a report published in 2017 by the Pew Research Center in Washington, DC, based on data from the US Census Bureau and the National Center for Health Statistics, divorce among US adults 50 or older roughly doubled between 1990 and 2015; among those 65 or older, the divorce rate tripled." (Good Times)
Women leave the financial planning to their husbands.
I don't need a report to qualify this statement. I have enough anecdotal evidence from our own practice to know that many women don't even want to attend a retirement planning meeting and most men are ok with this. We just do not allow it.
The reality is a woman is more likely than a man to find herself alone and underfunded in retirement at some point. As a woman, this is something you need to be aware of and start planning for now.
Why is it different for a married couple in retirement?
Couples will most likely have two OAS and CPP cheques per month. Maybe one of them will have a work pension. However, when one spouse dies, a lot of that income disappears. The survivor benefit on CPP is 60%, up to a maximum. There aren't any survivor benefits from OAS and a lot of work pensions only have a 60% survivor benefit. It costs almost as much for one person to live as it does for two. The upkeep of the house, property taxes, utilities, insurance, and car maintenance remains the same.
Many women end up in poverty or are forced to sell the family home because they can no longer afford the upkeep. I recently heard of a widow in her 70s who found out after her husband's death that there was a huge mortgage on their home. She had to immediately sell the home and downsize. Not only is she now dealing with her husband's untimely death, she immediately had to downsize and uproot herself to a new place to live. Her husband was diagnosed with terminal cancer and died shortly after.
As a woman, what can you do to be better prepared financially for retirement?
1. Become more involved in the planning now. Don't let 'your spouse' look after all of the finances and planning. Attend all financial appointments and ask questions. Get involved and learn the ins and outs. This removes the majority of the financial stress at the beginning of widowhood. Believe me, your future self will thank you!
2. Don't sign papers you do not understand. You could unknowingly, and easily, sign a pension document that leaves you little or no pension benefits when your husband dies.
3. Insist on working with an advisor who is interested in both yours and your husband's concerns and ensures you both understand what's going on. If you have no relationship with your husband's "guy", or if he never makes eye contact with you in meetings, then you need a new "guy or gal". Seek out some independent advice to ensure your interests are being protected. We do not advocate that you each have your own advisor.
4. Double-check that all investments and life insurance policies have the correct beneficiary - you. This is especially applicable if you are in a second marriage. We recently saw a client's life insurance statement that had his first wife as sole beneficiary even though he is married for the second time. Could you imagine the horror of finding out after your husband dies that you are not the beneficiary? Well, we have seen it happen. This applies not only to life insurance but to investment accounts.
5. Know what debts are outstanding. Don't be caught surprised if you become a widow and find out about your husband's, and now your, outstanding debts.
6. Is there life insurance? If so, where is the policy or a recent statement? Who is looking after it? How much is there? Does the policy have your current mailing address?
7. Do you have a current will and who is the executor? If it isn't you then how do you get access to cash when your spouse is gone? Will you need to ask the executor to give you a monthly allowance? It will be humiliating to you if you have to ask for money every month until the estate is settled.
8. Consider deferring your CPP and OAS to age 70 as this will ensure you receive a higher pension for life. This is something within your control.
Are these things you worry about? Do you know in the back of your mind that you need to deal with some of these unknowns?
We work exclusively with individuals and couples age 55+ who are nearly or newly retired to create their Retirement Income Plan. We help you get your financial house in order so that you can live your ideal retirement lifestyle.
Having a proper Retirement Income Plan ensures you are getting the maximum income possible, are not paying more tax than necessary, and know how much you can spend in retirement without fear of running out and being a burden on your children later on. It is as simple as that! A Retirement Income Plan is the key to your having a worry-free retirement. Let us get you there. We offer objective, flat-fee retirement income planning.
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Retirement Income, Investment & Tax Planning For Those 55+
Willis J Langford BA, MA, CFP
Nancy R Langford CRS
