Vol.:(0123456789) 1 3 Journal of Family and Economic Issues https://doi.org/10.1007/s10834-021-09775-3 ORIGINAL PAPER Who Decides? Financial Decision-Making Among Older Couples HanNa Lim 1  · Su Hyun Shin 2  · Melissa J. Wilmarth 3  · Narang Park 4 Accepted: 4 June 2021 © The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature 2021 Abstract Using a sample of 2621 respondents from the 2014 Health and Retirement Study (HRS), this study identifes factors associ- ated with who makes complex fnancial decisions among older couples. Our results show that the bargaining power of wives has a positive association with their decision-making about savings, investments, and health insurance, while the power of husbands is negatively associated with wives being more responsible for decisions about health insurance and tax fling. Moreover, while the husband’s sense of control, risk tolerance, and cognitive ability are associated with decisions for all fnancial decisions, the wife’s sense of control, risk tolerance, and cognitive ability are related to some fnancial decisions only. Our results show some moderating roles of the perceived spousal social support, household income, and mother’s education on the association between the four explanatory variables (bargaining power, sense of control, risk tolerance, and cognitive ability) and who makes the fnancial decisions. The fndings provide potential benefts for older couples who consult fnancial professionals about fnancial management. Keywords Bargaining power · Financial decisions · Risk tolerance · Constraints on self-control · Cognitive ability Introduction The purpose of this study is to identify the factors related to who makes fnancial decisions in older households. This issue is important because the composition of U.S. house- holds continues to change in response to marital trends. For example, the number of households with remarriages, cohabitation, or no children has increased (Jacobsen et al., 2012). Infuenced by this demographic change, the role of women in labor markets has also changed (Bianchi et al., 2000). In 2014, 57% of noninstitutionalized civilian women aged 16 or older participated in the labor force, with a par- ticipation rate of nearly 42.5% for women aged 50 or over (U.S. Bureau of Labor Statistics, 2015). Women’s labor force participation is a pivotal issue for the U.S. economy, afect- ing child-bearing decisions and household income, among other things (Bianchi et al., 2000). Furthermore, shifts in labor force participation rates and household income infuence how couples navigate house- hold fnancial decision-making. On average, approximately 53% of married couples in 2014 had earned income from both spouses, with women contributing 36% of overall household income (U.S. Bureau of Labor Statistics, 2017). Because households in which both spouses share breadwin- ning responsibilities are more likely to have a joint or pooled money management system (Yodanis & Lauer, 2007), the growth in women’s earning power and their relative income within households may relate to who makes most fnancial decisions. With legislation such as the Equal Credit Oppor- tunity Act ensuring that women are more independent and active in their fnancial management and behavior, changes * HanNa Lim hlim@ksu.edu Su Hyun Shin su.shin@fcs.utah.edu Melissa J. Wilmarth mwilmarth@ches.ua.edu Narang Park yse5@txstate.edu 1 Department of Personal Financial Planning, Kansas State University, 343P Justin Hall, Manhattan, KS 66506, USA 2 Department of Family and Consumer Studies, University of Utah, 225 S. 1400 E. Alfred Emery Building, Salt Lake City, UT 84112, USA 3 Department of Consumer Sciences, University of Alabama, 316 A Adams Hall, Box 870158, Tuscaloosa, AL 35487, USA 4 School of Family and Consumer Sciences, Texas State University, 601 University Dr, San Marcos, TX 78666, USA