Becoming single again is different for men’s and women’s finances
Although it’s stressful for anyone who goes through a divorce or the death of a spouse, the impact on finances is very different for men and women.
- Whereas 93.5% of married men are in the workforce, only 69.3% of women are employed.
- Among those who are working, women are almost four times more likely to hold a part-time job than men.
- At the same time, women are likely to live longer and have higher healthcare costs than men.
- According to Bank of America, only 30% of women have a long-term financial plan.
As a result, divorced or widowed women tend to find themselves with less savings and lower salaries than their male counterparts—as well as less experience managing their overall finances. This presents an opportunity for financial professionals who can understand the differences and tailor solutions to women in these situations.
Help women navigate their finances through divorce
Getting divorced can be emotionally exhausting for some, liberating for others, and financially draining for many women. Help your clients prepare for divorce and organize their financial lives immediately after.
Prepare for divorce proceedings
- Understand how her budget changes without her partner’s income, expenses, and support at home.
- Plan for childcare—will one parent likely take complete custody, or is shared custody expected?
- Consider setting up personal, not joint, accounts—checking, savings, credit cards, retirement, and maybe others.
- Figure out her living situation and possibly a PO box for mail in the interim.
- Identify a divorce mediator or lawyer to work with.
Recalibrate after divorce
- Consider updating titling and ownership of assets and accounts.
- Choose beneficiaries and create her estate plan.
- Identify long-term financial goals and establish a new budget to help her reach them.
- Determine insurance needs and potentially set up new policies.
- Contact her tax specialist to understand how any alimony payments, changes in dependents, and transferring property may affect her.
In some ways, divorce results in two new clients. Don’t assume the former couple’s previous goals are still intact. Consider having a reset conversation with both people to start fresh and help ensure that you’re on the same page.
Regaining financial stability after widowhood
The passing of a life partner is one of the most challenging experiences someone can endure. Unfortunately, bills are still due, and your newly widowed client may be the organizer of funeral services, executor of the estate, and trustee to trusts. Help her break down these responsibilities into manageable steps, enabling her to focus on her family and grieving.
Take care of immediate needs
- Gather important documents, such as the will, life insurance, estate, and multiple copies of the death certificate.
- Make final arrangements—funeral, burial, cremation, etc.—following the deceased’s wishes.
- Contact Social Security, Medicare, and pension administrators for all that apply.
- Stay on top of routine bills, such as utilities, car payments, mortgages, and debts.
- Take care of executor and trustee duties.
Plan for the next few months
- Identify all estate-owned assets, and notify beneficiaries.
- Contact banks, insurers, and others to update account titles and beneficiaries to take sole ownership.
- File life insurance claims and develop an investment plan for the proceeds.
- Pay and collect debts owed.
- Cancel memberships, subscriptions, passport, driver’s license, Social Security number, and any other accounts associated with the deceased she doesn’t wish to maintain.
Many women will consider changing financial professionals after the passing of their partner. Invest in your relationship with her to prove you have her best interests at heart.
Envisioning single life to create long-term goals
Whether your client is recently divorced or widowed, the first several months are primarily about processing emotions and managing through the necessities of the respective process. After the dust has settled, she needs to start envisioning her new life, long term. You can help her make sense of the financial implication of each decision.
- Living situation—Downsize to save money? Move closer to family or friends? Find somewhere with less indoor and outdoor maintenance?
- Insurance needs—Evaluate appropriate coverage types and amounts.
- Appropriateness of investments—Ensure your client’s investments align with her risk profile and financial goals.
- Long-term care needs—While this was likely already factored into her financial plan when she was married, it should be revisited to help ensure no changes are needed. Most nursing home residents are women and she won’t have someone else at home to help.
- Social Security decisions—For someone who hasn’t retired and started receiving Social Security benefit payments, help her understand her options: personal versus survivor or spousal benefits and when to initiate payments to maximize her long-term income.
Building your practice around female clients
Supporting women clients should be standard operating procedure for building your business for many reasons:
- Women are more likely to work with a financial professional than men, especially when:
- Receiving a windfall of money (e.g., life insurance proceeds)
- There’s a change in the household, such as a divorce or death
- Highly recommended by someone they trust
- Women are starting businesses at twice the rate of men
- 54% of working women are the primary breadwinner of the family, and millennials and Generation X women are one and a half times more likely to be the breadwinner than baby boomers and traditionalists (i.e., the trend is growing in the younger generations)
- According to McKinsey & Company, women will take control of the lion’s share of boomer wealth inheritance over the next decade
Consider the many benefits of hiring talented female financial professionals to diversify your practice. Female prospects, including those described above, may favor advisory firms with more female representation. Having a strategy for 50% of the population makes sense.
Being an advocate for women’s financial stability
Divorce and widowhood aren’t sex-specific—both happen to men and women—but the financial effects for women in these situations can be challenging to bear:
- More women reduce their work hours or quit their jobs to care for children or family members than men
- Women have lower retirement savings than men
- Only one in five women is considered financially healthy
Because of these differences—and the business case made above—women deserve your attention. Divorce and widowhood are two good reasons to partner with women to help them get their finances on track, but they’re not the only ones. One of the best reasons to work with women could be longevity of your advisory business.
1 “100 Must-Know Statistics About Women and Retirement,” Morningstar, 2021.
The content of this document is for general information only and is believed to be accurate and reliable as of the posting date, but may be subject to change. It is not intended to provide investment, tax, plan design, or legal advice (unless otherwise indicated). Please consult your own independent advisor as to any investment, tax, or legal statements made.
John Hancock Retirement Plan Services LLC offers administrative and/or recordkeeping services to sponsors and administrators of retirement plans. John Hancock Trust Company LLC provides trust and custodial services to such plans. Group annuity contracts and recordkeeping agreements are issued by John Hancock Life Insurance Company (U.S.A.), Boston, MA (not licensed in NY), and John Hancock Life Insurance Company of New York, Valhalla, NY. Product features and availability may differ by state. Securities are offered through John Hancock Distributors LLC, member FINRA, SIPC.
John Hancock Investment Management Distributors LLC is the principal underwriter and wholesale distribution broker-dealer for the John Hancock mutual funds, member FINRA, SIPC.