Should both the husband and wife be involved in family finances?

Dale Immekus |

Should both the husband and wife be involved in family finances?

That would be a resounding yes! My father passed away when I was 25 years old but being the youngest of six my mother had a large family to help her get through an inevitable tragedy. My mother however, had never been involved in the monthly budgeting exercises and was pretty much in the dark when father died. Don’t let this be you.

Most people are aware that women, on average live longer than men but how much longer? To answer, let’s look at some statistics which will help emphasize the need for women to be financially aware. According to Center for Disease Control states that in 2017, on average women outlive men by three years however another study by University of Washington puts the number closer to five years. The Social Security Administration estimates that an average sixty-five-year-old women can expect to live to age eighty-seven, 25% of which will live past age ninety and 10% will live past age ninety-five!

Financial statistics for women can be quite discouraging as 12% of women older than sixty-five live in poverty. For divorced women 17% live in poverty and 15% of widowed women live in poverty. Women approaching retirement have on average $81,000 compared to men at $118,000. This can occur for several factors, women may choose to work less while raising children, possibly pay disparities, or other career choices. There is another reason which most financial planners would agree with.   

The annual contribution limits for Traditional and ROTH IRA accounts. For people under age fifty that limit is $6,000 and for those of us over age fifty we can add another $1,000 catch-up contribution for a total of $7,000 per account, per spouse. I hope you caught the “per spouse” ending of that sentence.

In many cases, if there is one spouse working outside the home and the other spouse is not working outside the home, the couple may only contribute to the income earning spouse’s IRA. If there is enough earned income a married couple may contribute up to the maximum annual limit to both spousal accounts. It does not matter if only one spouse has an earned income. Both spouses may maximize contributions to their accounts for a total of $12,000 for couples under age fifty and $14,000 for those over age fifty. If more couples took advantage of this, the gap of savings prior to retirement mentioned above would close. In my practice the younger age groups are getting better at maximizing contributions but the baby boomer and previous generations have not done a very good job as the numbers clearly reflect.   

Besides the savings issue, both spouses must be involved in the family finances. Budgeting will not be successful if both are not on board. Both spouses need to know what gets paid and when. They need to be involved in daily, monthly and for long-term financial decisions. Goals will not be attained if a couple is not working together toward the same end.

Of course, I am writing in generalize terms. There are many men who are aloof when it comes to the financial side of the relationship. The men in those cases, need to get a handle on family finances as well. There are also many women who provide for their families for example, women earn more than men in 40% of the U.S. households, and own 30% of the privately-owned businesses employing millions of workers. Financial responsibility is a family effort and all members will benefit from working together. Until we talk again, be well.