How to Help Women Who Are Single in Retirement

The majority of women over the age of 65 are single, according to 2014 U.S. Census data, whether by choice, divorce or the death of a spouse. For financial advisors, it's important to ensure that women are a part of the retirement planning process early on, and to make sure everything is in order if their spouse were to pass away. Mistakes in planning for these situations can have serious consequences down the road and jeopardize their quality of life.

In this article, we will take a look at five tips for financial advisors to help single women who are approaching or already in retirement.

Married women should ensure that life insurance policies and other accounts have updated beneficiary information. After all, the last thing a widow wants to hear is that they have no control over their finances. The beneficiary information on IRAs and other retirement accounts, for example, overrides wills, meaning an ex-spouse could get the assets if they're still named as the beneficiary. A failure to appoint any beneficiaries could also put accounts in an estate and subject them to creditor demands. (For more, see: What Women Want from a Financial Advisor.)

It’s important for women to have an open conversation with their spouse about how assets will be managed when one of them passes away. If a spouse is unwilling to hand over control, it might be a good idea to consider an impartial attorney or financial advisor that can handle the assets as a second option rather than relying on a friend or other third party that’s may not be legally bound to make the best choices on behalf of the couple.

Men may have traditionally controlled household finances, but these days, it’s important for everyone to take an active role. This means attending meetings with financial advisors and becoming a part of the decision-making process. By doing so, it will be much easier to take over control if and when a spouse passes away and avoid appointing third-party trustees or relying on the state or others to manage finances during difficult times.

Financial advisors should try to ensure that both spouses are involved in financial planning and decision-making. According to a TIAA-CREF report, advisors may be putting their firm at risk by working with one spouse and ignoring the other. The report found that a full 70% of secondary clients in these situations bail on their existing financial advisor for another after the death of their spouse since their advisor isn’t up to speed on their situation. (For more, see: Why Do Widows Leave Their Advisors?)

The average woman lives to the age of 87, according to the Social Security Administration, which means that half of woman live even longer. Often times, it’s easy to overspend in the early years of retirement only to regret it and have to cut back down the road. Financial advisors can help prepare for a long life by optimizing Social Security benefits, investing in the right asset allocations, and modifying spending habits if necessary.

Financial advisors may want to consider using visualizations as a way to communicate these dynamics in a way that’s easy to understand and adjust. For example, Advincent’s Figlo® software provides a visual timeline of a client’s finances between the current date and their projected end of life and changes colors depending on the success or failure of their current plan – a good visual reality check for clients.

Planning for long-term care is an important element of financial planning that often goes unaddressed. For women, this planning may be especially important given longer life expectancies. Assisted living communities have a 7:1 ratio of women to men, according to the Assisted Living Federation of America. The majority of women move into these communities following the death of a spouse.

Despite these compelling statistics, a Lincoln Financial Group survey found that 73% of respondents significantly underestimated the costs associated with long-term care and 22% didn’t believe they would ever need it (the true figure is around 70%). Financial advisors should help women and couples accurately quantify these costs and clearly explain the many long-term planning options available to them. (For more, see: The Unique Ways Women Approach Finance.)

Financial planning is always a balance between expectations and needs. Investments in Roth IRAs and 401(k)s vary based on the market, while Social Security and pension benefits are a lot more predictable in nature. Annuities and similar fixed investments can also provide stable income during retirement years, but it’s important to balance predictability with returns in order to most effectively utilize capital over time.

Financial advisors should help clients assess their risk tolerance – with tools like Riskalyze, for example – and adjust those levels over time. In addition, it’s important to stress that the stock market may not perform in future years as well as it has in the past. Conservative investments like municipal bonds or annuities may have a place in a diversified portfolio as a way to generate near-guaranteed income streams.

The majority of women over the age of 65 are single, which makes them an extremely important demographic for financial advisors. By keeping these tips in mind, advisors can help these women prepare for and manage their retirement. (For more, see: How to Help Female Clients Retire Successfully.)