By Kelly Greene, Wall Street Journal
Husbands and wives increasingly are switching the traditional roles of breadwinner and household manager. But many of them haven't followed through with an appropriate financial tune-up.
In recent decades, women have outpaced men in education and earnings growth. According to the U.S. Census Bureau, some 29% of wives in dual-earner couples brought home more pay than their husbands in 2009, the most recent data available. That's almost double the 16% figure in 1988, when many of today's 40-year-olds were finishing high school.
With that shift in income, financial planners say they see more husbands supervising the home front. It's part of a long-term trend that appears to have been hastened by the recession. Although there is less social stigma than there once was—with "daddy play groups" proliferating—it is triggering money problems for some couples.
Given that employers in recent years have shifted management of most benefits—from retirement savings to health insurance—onto workers' shoulders, it is critical that couples recognize areas where adjustments might be needed. Among the most important:
Life insurance
Even in families where the husband is no longer the top earner, or where both spouses have similar incomes, the husband often carries more life insurance.
The wife probably needs just as much.
Michael Terrio, an investment adviser in Port St. Lucie, Fla., recently worked with a retired couple whose pensions and Social Security benefits were nearly the same. But the husband had $250,000 in term-life insurance, which is coverage at a fixed premium for a set time period, while the wife had only $75,000 in coverage.
"If she were to die, he'd be in trouble," Mr. Terrio says.
To fix the problem, he had the couple shop for a new life-insurance policy that also could be used to pay for long-term care for either spouse. He also helped the wife select a fixed annuity that would replenish most of the husband's income if he were to die first. The husband, not a fan of annuities, invested in a portfolio composed of exchange-traded funds and, to limit downside risk, options.
Couples who are still working should consider term-life insurance—typically the cheapest type available, says Emily Sanders, a CPA and chief executive of Sanders Financial Management in Norcross, Ga.
Ideally, a couple should buy enough coverage to replace their income until their youngest child is out of college—and to pay off a mortgage and any other loans. That way, "someone struggling to raise young children by themselves isn't strangled by debt," she says.
Even if the father is earning nothing while raising children or starting a business, "he should be insured so Mom could continue working and afford a nanny," Ms. Sanders says.
If you get life insurance through your employer, consider buying additional coverage elsewhere instead of getting it at work. "If you leave the company or are terminated, and something happens in the interim that makes you uninsurable, your family is in a hole," she says.
Retirement savings
A husband without a regular paycheck may be tempted to tap his retirement account early in order to continue to contribute to the household kitty. Try to avoid the temptation, even if it means swallowing your pride.
Ryan McKeown, a certified financial planner in Mankato, Minn., cites one couple he worked with recently in which the husband has retired, but the wife is still employed. The couple are in their 50s and have no mortgage or debt, and can live on the wife's paycheck alone. She also has $92,000 in her savings account.
Despite this, the husband started taking early withdrawals from one of his retirement accounts, triggering taxes, because he felt he should still be contributing to the household's income, Mr. McKeown says. To talk him out of it, Mr. McKeown says he put everything on one piece of paper so the husband could see how it was hurting them.
Another hazard: When a husband becomes the lower earner in his late 50s or early 60s, he may reflexively rebalance his retirement investments more conservatively—bulking up on bonds and selling off stocks, say—even if his wife is earning enough to meet the couple's needs. "I warn them away from that as much as possible," Mr. McKeown says. "You hate to give up growth potential too early on."
Child care
As obvious as it may seem, some families with out-of-work or underemployed fathers need to reassess their child-care needs and scale back.
If a mother quits work or shifts to a part-time job, the family typically sheds whatever child-care costs it can, Ms. Sanders says. But if a father is home, even if he isn't working, the family tends to keep some—or all—of its child care in place. The same goes for housekeepers and other domestic help.
"If someone feels like they have to have a nanny, we aren't going to tell them they can't," Ms. Sanders says. She tries to make her clients aware of the expense, which in many households rivals the mortgage payment. She suggests considering less-costly arrangements, such as sharing part-time care with a neighbor.
https://news.fidelity.com/news/article.jhtml?guid=/FidelityNewsPage/pages/money-strategies-for-dad&topic=financial-planning
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