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Important Considerations for Women in Financial Transition

Mallory Labik

December 4, 2023

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Financial decisions are often influenced by emotions, and navigating major life transitions can make these decisions even more challenging. Whether planned or unplanned, the various financial transitions that women experience throughout their lives can have significant impacts on their overall financial well-being.

According to AARP two thirds of women between the ages of 40 and 79 have experienced a major financial transition1, such as remarriage, changing jobs, divorce, widowhood, receiving an inheritance, or selling a business. While it is impossible to suppress your emotions entirely, gaining knowledge and learning practical strategies can help make better financial decisions.

Tips for navigating financial transitions:

  1. Do not rush decisions.
    Take your time to make well-informed choices, and do not feel pressured to decide quickly.
  2. Understand your new financial situation.
    Gain a deep understanding of your financial circumstances after the transition.
  3. Build your financial knowledge.
    Increase your financial literacy to feel more confident in your decisions.
  4. Set goals.
    Determine your short-term and long-term financial goals to guide your decisions.
  5. Seek professional guidance.
    Surround yourself with trusted professionals who can provide guidance tailored to your situation.
  6. Practice self-care.
    Prioritize your well-being throughout the process as emotional and mental health play a significant role in financial decision-making. 

Accredited By:

Mallory Labik
Wealth Advisor
Mallory Labik
CFP®, CDFA®

Mallory is a wealth advisor at Fragasso who is dedicated to helping clients design a customized wealth plan unique to their goals and investment preferences. She specializes in working with women investors and those experiencing significant life transitions, such as divorce or the loss of a spouse. Mallory finds it especially fulfilling to guide individuals […]

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This article has been reviewed for accuracy by Fragasso's leadership team and accredited by Mallory Labik to help ensure the information reflects current financial planning and wealth management principles.

Tips for specific life transitions:

Divorce

  • Take inventory of all assets, debts, and income streams.
  • Create a post-divorce budget to understand your financial capabilities.
  • Seek financial advice early to address various considerations such as:
    —Can you afford to remain in the home?
    —What are the tax consequences of each asset you may receive?
    —What rules apply when splitting company retirement plans?
    —How will health insurance be affected?
    —Are there life insurance considerations for spousal and child support?
    —What social security or pension benefits you are entitled to?
  • Update wills and beneficiary designations.
  • Prioritize your well-being during this emotionally challenging period.

Selling your business

  • A business owner should begin planning years in advance.
  • Define your succession goals, including your individual needs, family’s needs, and the needs of the ongoing business.
  • Determine options for future leadership which could be family, a business partner, a third-party buyout, or employees of the business.
  • Obtain a valuation for your business by a certified professional.
  • Examine options to structure the sale and the tax implications.
  • Communicate the plan and review the plan on a regular basis.
  • Consult professionals on how to manage the proceeds from the sale to meet your long-term goals.

Remarriage

  • Open and honest communication about finances is essential.
  • Discuss your financial beliefs and practices to align your goals.
  • Consider a prenuptial agreement, especially if you have significant assets or children from previous marriages.
  • Update wills and beneficiary designations to reflect your wishes in the new marriage.
  • Work with a financial advisor to create a joint financial plan.

Widowhood

  • Defer all but essential decisions for at least a year, giving yourself time to grieve and adjust.
  • Work with your trusted advisors to tackle the decisions that need to be made immediately such as:
    —Determining how your income streams
    may change and adjusting your budget accordingly.
    —Apply for survivor benefits for social
    security and pensions.
    —Making claims for any life insurance
    policies.
    —Reviewing your health insurance
    coverage.
  • Consulting a financial advisor to create your long-term plan is imperative.
  • Update your will and estate planning documents.
  • Remember, you do not have to go through this alone; support networks are crucial.

Inheritance

  • Take a step back and evaluate your options.
  • Consult with a financial advisor to create a plan by prioritizing short and long-term goals.
  • Understand the estate and income tax implications and plan accordingly.
  • Determine if you will keep the inheritance in your name or add your spouse. In most states, an inheritance is considered separate property unless you add your spouse’s name to the assets.
  • Review your own estate plan updating wills and beneficiary designations.

Changing Jobs

  • Evaluate how the job change affects your income, expenses, savings, and investments by revisiting your budget.
  • Understand how benefits like insurance or retirement plans will change and plan accordingly.
  • Consult an expert to help assess options for your former retirement plan, considering costs, investment choices, and future guidance.

Change is inevitable and you may not always see it coming. Remember every individual’s situation is unique, and the advice you receive should be tailored to your specific circumstances. Seeking guidance from professionals who specialize in your type of life transition can provide the best support and expertise. Fragasso’s team is here to guide you through any life transition and coordinate the help of other professionals needed.

source:
1. https://money.usnews.com/investing/investing-101/articles/the-financial-challenges-of-women-in-transition

 

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