By Meredith Moore
Did you know that women fill the primary breadwinner role within families nearly as often as men do? This is especially true in the later years of the partnership. One highly successful entrepreneur I know likes to joke that her long-time husband was the primary breadwinner for the first 25 years of the marriage and that she will be the primary breadwinner for the second 25 years. The role reversal she describes is actually quite common, with women often becoming the primary earner as the couple reaches mature years.
Couples, when considering their financial futures together, will want to understand the impacts of a potential role reversal on their financial strategy as well as the power dynamics within the relationship. The idea of men as the primary breadwinners still lingers for many reasons. Women were traditionally seen as wives and mothers first, with any “career” a trivial afterthought. Because of this viewpoint, women’s education was seen as less of a priority, leaving them unable to compete with men in the job market even if they had a desire to excel professionally. Even today, it is the woman, almost invariably, who takes time out of her career or delays beginning it while raising children. These factors may explain why it is that women remain underrepresented in high-earning jobs and overrepresented in low-paid fields such as childcare and education.
These notions are changing slowly – and, of course, there are always examples of couples who were ahead of their peers, blazing a trail and seemingly getting the balance just right. U.S. Supreme Court Justice Ruth Bader Ginsberg, who recently passed away, and her husband Martin David Ginsburg, known to be a gregarious tax law professor who put his wife's career ahead of his own, are one great example.
The good news is that women currently earn more than half of the Bachelors and Masters degrees granted each year, and the number of women-owned businesses has been increasing significantly over recent years. These shifts indicate that we can expect the playing field to continue evening, but biology cannot be denied. For many families, the choice to bear and raise children means women are less likely to be the primary breadwinner during the early years of the marriage.
Looking at Retirement Differently
The way we define retirement is also changing – and some may even bristle when they hear the word “retirement.” One boomer executive I know says she resists the idea of people being put out to pasture, like a once-productive cow. A full-on end-to-work holds less appeal for today’s professionals, even if they have enough money to last the rest of their life. While a year-long sabbatical may be enticing, the idea of rocking chairs and travel replacing all professional activity sounds boring, especially to women. And, with fewer years in the workforce after time out to raise children, women are often just hitting their peak earning years and rising to the top of their profession as they enter their fifties and early sixties.
Professionals of both sexes are moving toward a model of retirement based on “work optional” status along with full financial security. At this time, they are free to start consulting (on a part-time basis, perhaps) and have access to extra capital from restricted stock or ‘retirement’ investments. They may want to buy or launch a business.
A few more years pass; all the kids are grown and gone, self-supporting and doing their own thing. The husband, often a few years older, may take a more traditional retirement path. He may or may not be interested in continuing to work part-time. Whatever his preferences, returning to the traditional workplace may no longer be in the realm of possibility due to ageism or health concerns.
At this point, the turnabout is complete. The woman is now the primary breadwinner, at the apex of her professional status and bringing in significant income through consulting or actively growing her business. The man is a bit older and either out of the workforce entirely or participating to a lesser degree.
Planning for a New Paradigm
In the ideal scenario, the family has full financial security now (i.e. statistically speaking, there is no way they will run out of money even if both partners live to 100). Between retirement savings, company pensions, social security and other investments their needs are covered. But the sequencing of these income and asset spigots can be critical for maximizing cash flow and creating tax efficiency.
For optimal benefit, couples should seek professional advice for how to structure income and benefits during this phase. It may be wise for the husband to delay claiming social security benefits until age 70, thus maximizing the payouts when he does eventually claim. He may also want to wait until age 72 before he begins taking required minimum distributions (RMDs) from retirement accounts, as permitted by the new CARES Act. These strategies allow for greater tax deferral for the couple while the wife’s income addresses household cash flow needs.
In financially secure couples, the new business owner brings extra money to the household, creating a lifestyle she enjoys and savoring the experience of running her own business. If the financial situation isn’t quite as rosy, those earnings from the business and/or consulting play a key part in helping the family meet day-to-day needs while bolstering savings and investments.
Building Resilience to Withstand Change
This pattern is one I’ve seen time and time again, but of course, every family’s path looks a little different. The important thing is to remember that shifts in household finances and who’s earning more are extremely common. Things change, constantly, in ways we expect and others we never anticipated. That’s one more reason it is so critical for couples to create a strong foundation for dealing with finances from the beginning.
No matter who is earning more at the moment, every couple needs to establish a system of household financial management based on open communication. Traditional roles of “breadwinner” and “stay-home non-earning spouse” should be avoided as much as possible. Even if those terms accurately describe what’s happening at the moment, neither partner should incorporate either status as an immutable part of their identity – or allow their spouse to act as if it is.
Both partners, regardless of gender or current earning status, should take care to engage in the family finances and continually increase their financial literacy. Both partners should be involved with choosing and working with a qualified financial professional, seeking advice for the technical aspects of financial planning and also using the chosen professional as an accountability partner to keep the plan on track.
By communicating honestly and often, building financial literacy and staying actively engaged in family finances, couples can ensure that they are financially empowered both individually and together, come what may.
About the author: Meredith Moore
As a woman who has spent the last 20 years leading her own practice in a profession dominated by men, Meredith Moore is keenly attuned to how women approach financial awareness, management and decisions. In early 2020, Moore published a white paper on the interplay between gender, money and power and how gender role assumptions impact women’s financial power within personal relationships. She holds a Bachelor of Industrial and Systems Engineering from Georgia Tech and has received numerous awards for her professional work. She is a 2017 graduate of Leadership Atlanta. A cancer survivor, Moore firmly believes that perseverance and a methodical approach allow individuals to achieve any goal. Learn more at www.ArtisanFSonline.com.
Meredith C. Moore, Registered Representative, offering securities through NYLIFE Securities LLC, Member FINRA/SIPC, A Licensed Insurance Agency. 1125 Cambridge Square, Suite C, Alpharetta, GA 30009 (770) 587-0281. Financial Adviser offering investment advisory services through Eagle Strategies LLC, a Registered Investment Adviser. NYLIFE Securities LLC and Eagle Strategies LLC are New York Life Companies. Artisan Financial Strategies LLC, is not owned or operated by NYLIFE Securities LLC or its affiliates. Neither Artisan Financial Strategies LLC nor its advisors provide tax, legal or accounting advice.