Women Starting Over

How to Take Charge of Your Financial Future

 | Source: Allianz Life Insurance Allianz Life Insurance

MISSION, KS--(Marketwire - July 26, 2010) -  (Family Features) Women are more educated, earn higher incomes and have a more powerful role in the workplace than women of previous generations. But in spite of this progress, 90 percent of women say they feel financially insecure, according to the 2007 Allianz Women, Money and Power Study. The vast majority of women will need to take financial responsibility at some point in their lives, so it is vital that they have the knowledge and confidence to take charge of their financial future.

Women at Risk
A 2009 report by The Women's Institute for a Secure Retirement (WISER) says that women are particularly vulnerable going into retirement. The findings in "How Can Women's Income Last as Long as They Do?" show that:

  • Women at age 65 are expected to live, on average, another 20 years -- four years longer than men. That means they will need to save more for retirement.
  • Less than one third of retired women today receive pension income. And less than half of today's working women have access to a pension or retirement savings plan through their jobs.
  • For more than 40 percent of older women living alone, Social Security is virtually all that they have. This group is four to five times more likely to be poor than married couples.

"Each stage of life holds events that can shape your financial needs and impact your ability to achieve long-term goals," says Katie Libbe, vice president of Marketing Solutions for Allianz Life. "Divorce and widowhood are two stages that have significant financial impact for women, so they need to learn how to take control of their financial futures."

Tips for Starting Over

Losing one's spouse through divorce or death means a change in financial needs and responsibilities. Here are some tips to help begin the process of starting over.

Find Your Starting Place.

Before you begin any new journey, you need to know where your starting place is. Gather all the information you need to evaluate your current financial situation. These include:

  • Checking and savings account statements
  • Credit card information
  • Tax returns
  • Social Security records
  • Investment information -- stocks and bonds certificates, mutual fund statements
  • Insurance policies -- homeowner's, life, auto, health, long-term care
  • Retirement assets -- 401(k), pension, IRA, ROTH IRA, annuity statements
  • Deeds
  • Wills and powers of attorney

Know Your Benefits.
As a divorced spouse, you may still be eligible for certain benefits from your partner's retirement plan and Social Security payments.

  • You may be able to obtain rights to a portion of your spouse's retirement benefits. In most plans, this is done using a Qualified Domestic Relations Order (QDRO). Find out from the plan's administrator what requirements must be met.
  • If you are divorced after at least 10 years of marriage, you can collect retirement benefits on your former spouse's Social Security record if you are at least age 62 and if your former spouse is entitled to or is receiving benefits.
  • If you have filed joint tax returns, you may be able to apply for Innocent Spouse Relief, which frees you from the responsibility of paying taxes attributable to your former spouse.

As a widow, you can explore the following options:

  • You are allowed to rollover an IRA you may have inherited from your husband into your own IRA.
  • Be sure to contact the Social Security Administration to apply for the $250 death benefit under your spouse's Social Security benefits and to determine your new benefit amount. Typically you will receive the greater of his or your benefits, but not both.
  • It's important to file estate taxes within nine months of your husband's death to avoid any interest penalties.

Develop a New Budget.

Evaluate how much money you will need for the next six to 12 months and keep that money in an easily accessible account in your own name.

  • Pay Your Bills. Failure to pay your bills can result in bigger problems due to late payment fees, interest charges, and damage to your credit history.
  • Take it Slow. Don't make any major purchases or changes right away. Give yourself time to heal emotionally before rushing into major decisions.

Don't Go It Alone.

If you don't already have a financial advisor, it may be advisable to get one. "A professional financial planner can help you improve your current financial management and help you through these challenging changes," says Libbe. "Their expertise and objective perspective can save you time, and help you invest for your future."

To find a qualified financial advisor, you can ask trusted friends or professionals, such as lawyers and accountants, for references. You can also get references from professional associations such as the Financial Planning Association, the National Association of Personal Financial Advisors, or the American Institute of Certified Public Accountants.

Make sure that you have a support network made up of trusted family, friends and professionals who can give you feedback, go with you to meetings and help you follow up on the actions you need to take.

Starting a new phase of life can be challenging, and there are a lot of uncertainties. But by taking action now, you can take control of your finances and give yourself a more secure future.

For more information on finding a financial advisor and to download free financial checklists for the widowed or divorced, visit allianzlife.com/WomenMoneyPower.

What's Your Financial Personality?
Knowing your particular financial personality type will help you and a financial professional create a personal approach to planning your financial future.

Financial Dreamer: Intimidated by money and investing, you feel helpless and hope that someone else will help you take care of your financial problems.

Financial Avoider: You feel overwhelmed by all the financial choices available to you. A lack of financial knowledge keeps you from taking the necessary steps to resolve your financial problems.

Financial Initiator: You're self-assured, empowered and optimistic. You're quite clear about your financial goals, and typically know how to achieve them.

Financial Collaborator: When in a relationship, you're healthy, happy and cooperative. You provide family financial comfort and stability. You and your partner share equally in financial decisions and actions.

Financial Analyzer: You have a good understanding of household finances, and take initiative in thoroughly researching investment opportunities and tracking financial results. You're a comparison shopper, an avid saver and rarely purchase something you can't afford.

Find out which type you are by filling out the Financial Personality Worksheet at https://www.allianzlife.com/WomenMoneyPower/ConsumerInformation.aspx.

Learn More
It's never too late -- or too early -- to start learning about financial matters. Here are some online resources to get you started.

Illustration courtesy of Getty Images