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Dear Wives

Are you looking to get more involved in overall financial decision-making?
Many financial advisors express frustration over their inability to get wives involved in financial planning.  Whether it's lack of interest by the wife or dominance in conversations by the husband, it is fairly common to see one-sided decision-making by married couples.

When it comes to Social Security decisions, it would seem natural that the husband would take the lead. In the majority of marriages the husband is older, which means his Social Security decision comes first, and he's also the higher earner, which means his benefit will be primary. The wife's benefit—if there is one—is almost an afterthought, since it often doesn't contribute very much to their joint income. But husbands do not always make the best decisions for the couple.

A research paper, How Does Social Security Claiming Respond to Incentives?  Considering Husbands' and Wives' Benefits Separately, has found that husbands' benefit claiming is inconsistent with maximizing lifetime benefits for the couple. Husbands tend to respond to the actuarial incentives built into their own retired worker benefit formula, but not to the incentives built into the spouse and survivor formulas, the report says. The result is lower lifetime benefits for their wives. The reduction is greater for higher earners than for average earners.

One simple solution is to teach husbands how early claiming reduce their wives' potential survivor benefit. Some advisors might go so far as to suggest that the wives be the ultimate decision makers when it comes to Social Security claiming, because it is their eventual survivor benefit that will be most affected.

Here are some additional reasons wives should respond positively to Social Security discussions. The Institute for Women's Policy Research found that:
1. Women are less financially secure than men.
2. Women on the average have saved less than men.
3. Women are more likely than men to worry that their savings will not last throughout their retirement years.

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