Financial planning for trailing spouses
Written by Lynda Calver on June 08, 2016.
I have previously written about financial planning for single expat women, so I thought it was about time for a piece for married ladies who are living overseas because they came with a husband posted here for work– so-called ‘trailing spouses’ (and before I get accused of sexism, they are almost exclusively women).
The first thing I’d like to say here is that a man is not a plan. You may be dependent on your partner’s income (whether permanently or temporarily) but that doesn’t mean you should sit back and let him take care of all things financial. One of the three dreaded d’s - death, disease and divorce - could very well leave you without your currently reliable man which will mean you having to take the financial reins. How would you manage? Here are what I consider to be the three most important questions you need to consider:
1. Do you understand how the household finances work?
I have seen situations where the partner who is solely responsible for all things financial in a household passes away leaving the other completely at sea. That is a really scary position to be in and one which is entirely avoidable. Make sure you have a grasp of your family income and outgoings from rent/mortgage and regular bill payments to school fees and general expenditure. You should also know exactly what assets you and/or your partner own including bank accounts, investments and property. Knowledge is power so arm yourself to the max.
2. Do you have independent savings?
In the 21st century, relying on a state pension when you retire is no longer a viable option. Do you know what, if any, retirement provision is in place for you? Statistically you are likely to outlive your partner so your savings will need to last longer than his. Building wealth in your own name is important and the earlier you start the more you will benefit from the magic that is compound interest. Now is the time for a frank discussion with your partner to work out a financial plan together which includes independent savings for you.
3. Does your partner have life insurance?
Not a pleasant thought but do you as a couple have life insurance in place to protect you and your family if your partner died and there was no longer an income in the household? A failure to put adequate cover in place could find you either having to find work urgently or change your lifestyle considerably, or both. A good financial adviser can help you work out what level of cover you need taking into account your current financial obligations. Other wealth protection measures such as critical illness cover may also be worth consideration.
4. Is your estate planning sorted?
Estate planning can be complicated by cross-border issues, especially if you and your partner are of different nationalities. It is worth seeking expert advice to ensure that should one of you pass away, assets are distributed as you wish them to be.
As a trailing spouse, your lack of independent income makes you vulnerable so be sure not to add a lack of knowledge to it. If you feel there are any gaps in your financial planning having read the above, now is the time to take action. If you’d like an experienced planner on board to guide you, do feel free to get in touch.