“We don’t think this is a premeditated evil,” James Poe, chairman and founder of Texas Retirement Specialists, told PLANADVISER. “Men just don’t have a woman’s perspective.”
Men make several mistakes when planning for a retirement in which they will statistically die before their wives. The first is taking Social Security too early, which can mean forfeiting potentially hundreds of thousands of dollars, he said. Instead, the man should consider taking his benefits at age 70 because it provides the highest benefit to the person who will likely live the longest—the wife.
Research from Morningstar shows that spousal survivor benefits significantly increase the potential benefit from delayed claiming ages. For example, if both spouses are the same age and the primary spouse takes benefits early, then dies, the surviving spouse would have to earn 9.3% or higher on the invested benefits throughout retirement to be better off than if the primary spouse had delayed benefits (see “Paper Reveals Benefits of Delaying Social Security”).
In Poe’s experience, the majority of men who retire with a pension take the single life option (i.e., nothing to the survivor). The single life option pays the most current income, he explained, because the insurance company paying the monthly benefit knows how long the beneficiary is likely to live.
In addition, men may not consider health care expenses of the surviving spouse after they pass away. Some women act as long-term care providers for the husbands, but can be left without care of their own after their husbands die, Poe said. According to a 2012 survey by the AARP Public Policy Institute (PPI), 84% of Baby Boomer women versus 78% of men said they were concerned about having enough money for a long stay in a nursing home or long period of home nursing care (see “Financial Worry Greater for Boomer Women Than Men”)
To prevent leaving the wife without adequate care, the couple can explore options such as purchasing long-term care insurance or buying life insurance for the husband that is sufficient enough to replace the wife’s Social Security check, Poe said.
“Every couple should plan for retirement for the person likely to live the longest, not die first,” Poe concluded. “If this describes the wife, then everything the couple does financially should consider her longer life expectancy.”