We all know that someday we and our spouses will die, but knowing that and being prepared for what comes when one becomes suddenly single, either because of an unexpected death or divorce, is daunting, particularly for women.
Among the top five financial challenges facing women is the death of a spouse or divorce, says a recent report from Key Private Bank, as reported in CNBC’s article “How to prepare for being 'suddenly single.'” Those two are followed by estate planning, investment decisions and legacy planning.
Traditional gender roles may be slowly evolving, but experts say that many couples still adhere to them. Men typically oversee the finances, despite the fact that the average age of widowhood is 59, according to the U.S. Census Bureau. Many women live another decade or longer after their husband's death. Women may have a passive role in money and investing and hardly ever talk about money or investing. They don’t discuss these topics with their friends or co-workers and perhaps not even with their spouse. Just 3% of married female clients lead wealth conversations, according to Key Private Bank's advisor poll.
A “Lifebook” can help women successfully take control of their finances. This book is a collection of important documents and data, such as a balance sheet, an investment summary and a will. It should also include contact information for attorneys, financial advisors, bankers, insurance agencies and accountants. Many of the professionals surveyed—about 80%—said very few of their married female clients have these types of plans in place in case they are suddenly single, according to Key Private Bank. This is even though there are often critical financial decisions that must be made immediately after the death of a spouse.
It’s important to have a strategy because navigating finances after the death of or divorce from a spouse can be confusing. The top three steps married women should take are the following:
1. Identifying and documenting sources of income;
2. Meeting with a financial advisor; and
3. Determining the financial decisions that must be made immediately.
Getting divorced or losing a spouse means there’s less money flowing into the household and a newly single person’s lifestyle may have to change. Refusing to acknowledge this, and continuing to spend money on vacations, memberships or services that are discretionary in nature, will drain cash flow and emergency funds quickly.
Reference: CNBC (September 5, 2017) “How to prepare for being 'suddenly single'”