1. Do a financial inventory
The first step in financial planning under any circumstances is to determine a starting point. When working with newly single clients who are over 50, this is a critical first step.
In the case of a widow or widower, what assets do they have, including those inherited from their former spouse? There may be jointly held assets such as a home or investment accounts. There may also be joint debts. Did their spouse have a pension or retirement accounts such as a 401(k) or IRA? Are they the beneficiary of any life insurance?
In the case of divorce, what assets or property are now theirs as part of the settlement? This might include the marital home, investment or cash accounts and a portion of the ex-spouse’s retirement accounts. There might also be alimony payments or a cash settlement. On the other hand, they might be the one paying alimony.
This is in addition to their own assets, such as investments, retirement accounts, real estate or a business they may own.
A key part of the financial inventory is doing a cash flow analysis involving both cash inflow and spending to see where your client stands as a newly single person.