Hounsell recommended that advisors direct more effort to involve both spouses in planning meetings.
Miller noted that 70 percent of widows do not retain their family’s financial advisor after the death of a spouse, but involving both partners in advisor meetings could improve client-retention.
The earnings deficit can’t be viewed simply as a wage or a pay gap because women are more likely to be a family’s primary caregiver, and thus spend more time away from the workplace to care for young children or elderly parents. Such interruptions can cost women experience, raises and career advancement.
Hounsell says that legislation addressing the ‘caregiving gap’ in benefits and earnings has been proposed, but not passed through Congress.
Miller noted that lower pay and fewer years worked results in a gap in Social Security benefits between women and men. While couples can use their spousal benefits in optimization strategies to address the gap, single women remain at a significant disadvantage.
“It makes sense for the higher earner to delay filing somewhat,” Miller said. “If, true to the demographics, the man is outlived by his spouse, she will step up to 100 percent of his benefits when he passes away. That’s the survivor benefit.”
Women often also save less than men in workplace retirement plans and IRAs, yet they live longer than their male partners. Miller argued that women should resist the temptation to become more aggressive investors in search of higher returns.
“If there’s a gap you want to close, you want to close it by starting earlier in savings, saving more, and saving holistically,” Miller said.
Part of the gap can be attributed to men’s greater knowledge and comfort with investing, said Hounsell, “Generally, women don’t see themselves as experts when it comes to investing.”
That’s not the same as saying that women are worse than men at investing, said Miller, noting that women tend to get higher returns than men over time, and are very successful when engaged in goals-based planning.