Plan Single…. Even if You’re Not

90% of women end up responsible for their own finances later on in life.
Whether married or on their own, part of every woman’s financial plan needs a scenario where she plans single.

Now, before we go too far, let me be clear.  This is not about planning apart.  Rather, this is about planning for each other.  It’s about caring for your partner’s long term financial well-being in the event you no longer have each other.   You see, failing to plan single can lead to bad financial outcomes – and no one wants that for those they love.

Good financial planning isn’t just about bringing your vision for your future to life.   It’s also about risk management.   What are the circumstances that reasonably might impact your financial future?  What if we live longer than we expect?  What if one of us gets sick and needs long term care or requires expensive medical care?  What if we decide to retire earlier?  Or, what will happen to a survivor if one of us passes away before the planned 95, or 100?  Will I be ok if our relationship changes and our marriage ends in divorce?

The decisions you make along the journey can have a significant impact on your ability to successfully navigate the financial challenges that come with being single if you find yourself one of the 90% of women who do.

Firstly, being informed is your first line of defense.  As couples divide the household tasks, it is not uncommon that the man takes responsibility for the insurance and investing affairs.  Plan single means that while you don’t have to necessarily handle the day to day issues, you do need to be informed and stay in touch with the family finances and advisors.  Knowing where the family finances are held and how to contact them is essential.  I have seen too many widows attempt to develop an understanding of where all the assets are and the strategy they had been pursuing while simultaneously dealing with the grief of losing a spouse.  I have seen too many women face divorce and have no idea about the family’s assets – a distinct disadvantage when trying to negotiate a fair settlement.   Simply being informed helps protect you – not just to make sure your financial affairs are in order, but from having to add financial stress on top of the emotional stress that comes with losing a spouse.

Good financial planning for a married couple involves both parties and makes the most of the synergies the relationship creates.

Secondly, the strategies a married couple pursue financially can have a significant impact on a single again woman.   For example, the decision about when to start taking withdrawals from your RRSP (or convert to a RRIF).   It depends on personal circumstances and the types of savings you have, but the choice you make can have a significant impact on a survivor’s income.   In some instances while planning together to both live to 95 the financial projections say it doesn’t matter if you start your income from these sources when you retire or to defer it for a few more years.  However, there have been times when I change the scenario to one where both people don’t live to 95, but rather one survives the other for many years (a baby boomer woman can expect to outlive her husband by 10-15 years on average), and it has made tremendous sense to take the withdrawals early.  In some circumstances taking it earlier helps a survivor save on tax, keep more of their own Old Age Security and generally be better able to sustain a comfortable lifestyle.  If a strategy doesn’t harm you together, but it can help in the instance you become single again, plan single says pursue the strategy.

Thirdly, plan single means protecting each partner’s interests in the case the marriage ends in divorce.   While paying down debts and building wealth makes sense together, it also helps individually.  Quite simply, the higher your net worth (assets minus liabilities) the more you each leave the relationship with.   Beyond it simply making great sense to build wealth, the choices you make with your assets during your marriage can impact how much you come away with.  For instance, what you do with your inheritance.   If you use it to pay down your mortgage, or put it into joint accounts, in the absence of a formal marriage contract that states otherwise, that inheritance becomes marital property and you can expect to have to split it in the event of divorce.   If instead you keep those funds separate, invest the funds, growth the funds but don’t co-mingle them, that inheritance should remain yours and not split in the event of divorce.  Plan single says lets be smart as a couple, but protect me in case this relationship fails.

Good financial planning for a married couple involves both parties and makes the most of the synergies the relationship creates.  And, when done well, the process includes evaluating scenarios where if something happened yesterday, you would financially be ok today.  For women especially, plan single helps make sure that would be true.

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