Tuesday, October 6, 2015

Are you widowed? Here is some advice on retirement planning

70% of recent widows fire their current financial advisers.  Kimberly Foss has some advice on how to keep widows as clients as well as advice for widows on how to cope. Her full article is here.  Everyone wants advisors who understand their concerns and goals. Although many advisors think they have a good relationship with a couple, keep in mind that the widow’s perspective may not have been fully voiced previously — and it may also have changed due to her loss. 

How can advisor's help get widows on the right road after losing a spouse? I recommend a few guiding principles.
  • Allow time to grieve. As tempting as it is to begin with the numbers, a widow’s first priority must be dealing with her emotions. Many widows feel a sense of panic, especially if they spent the past months or years in a state of crisis, caring for an ailing spouse. It’s wise to avoid making major decisions for at least six months to a year.
  • Stay flexible. A life insurance disbursement should be placed in a money market fund rather than a certificate of deposit or any other fund that would tie the money up for a period of time.
  • Develop a plan for bills and paperwork. A widow who has not been the family’s chief financial officer may need a crash course in personal finance. Set up a system to deal with bills and evaluate investment account statements. Break down the long list of complex financial issues so that they can be addressed in an orderly fashion.
  • Look beyond financial matters. In addition to a financial advisor, the widow may also need to work with an attorney, a psychologist, grief counselor or even a career counselor. Certain professionals have greater skill and empathy for working with widows and women in transition. Drawing from your network, offer to coordinate the work of other professionals, monitoring their progress and systematically identifying and addressing any new needs that may emerge in the future.
  • Transition from immediate tasks to long-term planning. After the immediate concerns of locating the will and filing for life insurance benefits, it’s time to deal with life planning, including funding the children’s education and retirement and other goals. That’s tough when a client is alone. Develop a plan that takes a holistic view of the situation.
  • Take a team approach. Many recent widows turn to family members and friends for financial advice. But while an individual may provide essential emotional support, it is unlikely he or she can serve as a source of dispassionate expert advice. And if overused, this relationship can create an unhealthy dependency that prevents your client from making her own decisions. No one can take the place of a lost spouse, but you can help a widowed client create a team of experts.
  • Make retirement saving a priority. Workplace retirement plans mean tax-advantaged savings. So it’s a mistake to focus only on investing the life insurance settlement. Encourage widowed clients to contribute the maximum amount to their 401(k)s and, if they are over age 50, to make the additional catch-up contribution.

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