We talk with Regina McCann Hess, a Certified Financial Planner, president of Forge Wealth Management and author of Super Woman Wealth: How to Become Your Own Financial Hero, about the conversations women need to have with their spouses ahead of the wealth they could inherit.
Q: Within the next two decades, women stand to gain $9 trillion as Baby Boomer men age and pass wealth to their wives. How can spouses have more-open financial conversations to ease this transition, and what are the top things to discuss?
Hess: I’m on a mission to start kitchen-table conversations, because money has always been a taboo topic at the dinner table.
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Women need to know where their investments are, in both non-retirement and retirement portfolios. They should discuss how much they are actively contributing to these accounts and whether they have the ability to save more.
They should also review any debt they have. Is there a plan to pay off those loans, and what is the strategy to achieve it?
Another area to cover is life insurance. They should review not only whether they have life insurance, but also whether the beneficiaries and the contingent beneficiaries are up to date on any policy they do have.
Then I would check their estate planning documents. By setting up powers of attorney, you can make sure that someone is legally eligible to make health and financial decisions for you if you become incapacitated.
The beneficiaries on your will may need to be updated as well.
The overall financial plan is important to discuss, too. Have the couple had conversations to see whether today’s actions are going to help them reach their goals and to determine whether their money will last throughout retirement, and hopefully beyond?
Q: What key steps can women take to educate themselves and protect their financial well-being?
Hess: Women should be active in meetings with the couple’s financial adviser or planner. They should come to those meetings with prepared questions and request that the adviser explain financial concepts without jargon.
Another idea: Listen to financial podcasts, which range from beginner to advanced. I recommend Jill on Money with host Jill Schlesinger, So Money with host Farnoosh Torabi, and my podcast, Women and Wealth.
To protect their wealth, women need to create a strategy for long-term care. Discuss and determine what will happen if you have a health event that leaves you unable to care for yourself.
The plan can include staying in your home, but you must also consider the possibility and expense of moving to an assisted-living facility or nursing home in case your health deteriorates.
Discuss this with your family and determine who, if anyone, will help you.
Q: What are some common mistakes you see women make when they have to manage their wealth on their own after losing a spouse?
Hess: One is failing to update beneficiaries — on their retirement accounts, non-retirement accounts, wills, everything — to someone other than their spouse.
Usually, people choose other family members, such as their siblings or children. Many also add a nonprofit organization as a beneficiary.
Another mistake is not including the next generation in conversations about money and their role in saving, spending, preserving and donating.
You want your children to know what is important to you and how you envision your wealth being shared going forward.
Q: What should women look for in an adviser if they need help managing their wealth?
Hess: They should interview at least three people in person. Look at an adviser’s body language:
- Are they making eye contact with you?
- Are they asking you open-ended questions so that you can elaborate on your values, your visions, your fears and what you need to get out of this relationship?
Ask how the adviser is paid. Even if somebody says, “You don’t have to pay me a fee,” there are fees hidden in whatever they are doing — they may be paid by commission, for example.
If they try to sell you something in that first meeting, that’s a big red flag.
Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.