Ideally, women who are dependent on their husbands should always strive to participate and stay updated about the family’s finances but if they haven’t done so, it can be a good time to start when their husbands are about to retire.(Shutterstock)
Ideally, women who are dependent on their husbands should always strive to participate and stay updated about the family’s finances but if they haven’t done so, it can be a good time to start when their husbands are about to retire.(Shutterstock)

Just retired? Here’s how you can prepare your spouse for any emergency!

A study commissioned by the United Nations Population Fund revealed that income insecurity is a significant source of vulnerability among older women. More than four out of five women have either no personal income at all or very little income which makes economic dependency among older women high.
By HT Brand Studio
UPDATED ON APR 15, 2021 04:16 PM IST

For our grandmothers and the older women in the family, taking over the reins of money management was something they rarely did. Sure, they were extremely adept at managing household budgets but when it came to taking major investment decisions, the lines were drawn and women were kept out of it.

Given the deep-rooted patriarchal shackles which has kept many women light years away from being financially savvy, it becomes a herculean task for them to keep financial troubles at bay in their old age when they are faced with an emergency. It is unsurprising that in India many finances become a major problem if they find themselves in a situation where their spouses become incapable of managing finances or they are widowed.

For retired men – if they have been the one in the family to actively manage their finances – it is imperative to ensure that their spouses remain privy to their financial situation so that should in the event of a predicament, they are well prepared to take care of themselves and the others in the family, as the need arises.

A study commissioned by the United Nations Population Fund revealed that income insecurity is a significant source of vulnerability among older women. More than four out of five women have either no personal income at all or very little income which makes economic dependency among older women high. The report also highlighted that the economic well-being of older women is closely linked with their marital status because women are primarily dependent on their husbands for financial support. “Losing a partner means that women are deprived of this source of support, and will have to turn to their children or provide for themselves. A new care providing relationship with other relatives such as children, daughters in law or siblings will have to be negotiated,” it said.

Deepak Chhabria, CEO of Axiom Financial Services narrates, “In my practise, I have often come across instances where women were uninformed about their husbands’ finances. In the unfortunate event of the husband passing away, such women find themselves completely in the dark – so much so that they are clueless even about the number of bank accounts the husband held. A great deal of effort and time has to be spent then in sorting and understanding these matters, which could have been easily avoided if the husbands had involved them in money management after retirement.”

A two-way street

Ideally, women who are dependent on their husbands should always strive to participate and stay updated about the family’s finances but if they haven’t done so, it can be a good time to start when their husbands are about to retire. Since retirement would herald a stoppage on regular pay checks and you would have to largely depend on your retirement funds and investments, it would ensure that women know which locks have to opened as and when the situation demands.

If it is the onus of the wife to start becoming proactive on in taking on some financial responsibility, it is is the duty of the husband to teach her the basics of money management, answer any queries that she may have and discuss at length how any new investment strategies or changes in existing ones can impact their finances.

A lot of women find it hard to let go of inhibitions and harbour the conviction that investing is for men or is too complicated. Husbands can deconstruct investments and help them gain confidence by showing that investing is not rocket science and once they start doing it themselves, the learning curve is a smooth one. As early as possible, men should make it a point to involve their spouses in all discussions and decisions on money matters. Making tax filings and investment monitoring a joint exercise can pave the way for the women to gain confidence.

Ensuring that spouses partake equally in the management and monitoring of finances shouldn’t be confined to the husband giving regular updates to his wife about investments. This would leave glaring loopholes in the learning curve because when and if the time comes for when they have to actively manage investment portfolios, prior experience and familiarity can ward off a lot of financial troubles. Chhabria says, “Depending on children and other family members or friends for advice and help may not always be a good idea, as timely guidance may not be available and this can lead to poor decisions.” If it hasn’t been done already, husbands can start new investments in the name of the spouse that are easy to handle and entrust the wives with the responsibility of monitoring it, he adds.

It is also common for older women to lose assets because records are misplaced or go missing when there is a calamity and if they have not garnered knowledge about the family’s financial apparatus. To prepare them for such situations, husbands and family members should make them go over all papers, bank statements, keep a record of all assets with an explanation about how to redeem any asset and also make them acquainted with the factors they should keep in mind when monitoring assets. This can be of immense help during emergencies.

Husbands can also utilize the joint ownership route with regard to bank accounts, FDs and mutual funds – this way a combined effort at managing finances will also serve as an eye-opener for the wives to develop a rapport with bank staff and develop a basic understanding of what services they can avail from financial institutions. It is best to dabble with simpler investment vehicles than complicated ones because the inevitability of age-related cognitive declines has to be factored in as well.

Taking advantage of mutual funds

Mutual fund investments through SIPs can be a good option for women whose husbands have retired or are on the brink of retirement thanks to the simplicity and the flexibility it affords. Chhabria says, “There are a plethora of mutual find schemes and husbands and wives can together choose funds which are best suited for their needs. Mutual funds are a great investment vehicle for retirees to diversify investment risks, provide liquidity while ensuring good inflation-adjusted returns over the long term and most importantly, they are easy to monitor.”

Continuing equity investments in active mutual funds or index funds from pension or other incomes is also advisable but the allocation should be on the basis of the couple’s net worth and current risk appetite.

Key Takeaways

• For those women above the age of 60 who are grappling with a crisis and are faced with the situation of having to manage finances with little knowledge and experience, it is advisable to not have too many investments as managing them may be difficult.

• Husbands can also utilize the joint ownership route with regard to bank accounts, FDs and mutual funds – this way a combined effort at managing finances will also serve as an eye-opener for the wives to develop a rapport with bank staff and develop a basic understanding.

• In general it is also a good idea to have a trusted and professional financial advisor.

• Gaining familiarity with online transactions and banking processes is also vital given the increasing digitization of financial services. Also the knowhow of digital tools can also simplify things – for instance, you will not have to be bothered about signature mismatches which are a common issue with age.”

This article is part of the HT Friday Finance series published in association with Aditya Birla Sun Life Mutual Fund

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