Financial Planners: Educating Widows in Personal Financial Planning

By Korb, Brian R. | Journal of Financial Counseling and Planning, July 1, 2010 | Go to article overview

Financial Planners: Educating Widows in Personal Financial Planning


Korb, Brian R., Journal of Financial Counseling and Planning


Widows constitute a growing segment of the U.S. population; however, very little has been done to educate them on the basics of personal financial planning. The creation and implementation of financial planning education programs for widows can help them become more financially literate and free them from anxiety and fear. Interviews with eight financial planners and 12 of their widow clients, along with research into financial planning education programs form the basis for this paper. Research findings include suggestions for financial education content in the topic areas of financial planner qualities, goal setting, cash flow management, risk management, investment management, and estate planning. Implications for the role of financial planners and non-profit educational institutions in the financial education of widows are discussed.

Key Words: financial planning education, financial planner, personal financial planning, qualitative research, widow

Introduction

Widows constitute a growing segment of the U.S. population; however, very little has been done specifically to educate this segment on the basics of personal financial planning. Historically, many married women have relied on men for their financial support. "While this attitude toward financial dependency is changing, it remains a powerful force in America," says William L. Anthes, Ph.D., president of the National Endowment for Financial Education (NEFE) (Anthes & Most, 2000, p. 130). The creation and implementation of financial education programs for widows can help them become more financially literate and economically independent.

The number of U.S. widows will grow as the baby boomer population ages. There are 27.5 million married baby boomer women (women born between 1946 and 1964), 70% of whom are expected to outlive their husbands (Jervey, 2005; Perkins, 1995; U.S. Census Bureau, 2000, Table PCT7). Financial risks faced by female baby boomers include the rising costs of medical care, longer life expectancy, doubtful viability of Social Security and Medicare, inadequate retirement savings, and marital disruption through divorce or widowhood (Gaffen, 2004; Glass & Kilpatrick, 1998). These risks are compounded by the fact that baby boomer median financial assets (net worth minus home equity) were only $51,000 in 2001 (Gist, Wu, & Verma, 2004). Single women who had been married (widowed, divorced or separated) were about twice as likely (12%) as the average boomer (7%) to have zero or negative net worth (Gist & Wu, 2004). The poverty rate (approximately 20%) among unmarried women living alone aged 50 and older is four times the rate of married women and married men (Lee & Shaw, 2003). Little consideration, however, has been given to educating older, single women on strategies for gaining and maintaining financial independence apart from investing (Into, 2003). Many of these strategies are associated with daily money management tasks.

Interviews with 12 baby boomer widows and their eight financial planners, along with research into financial planning education programs, form the basis for this paper. The content, as well as delivery methods for such programs, are also discussed. Distinctions among the widows, segmented by age, will then be addressed. Lastly, the role of financial planners and non-profit educational institutions in these education programs will be discussed.

Review of Literature

Literature related to financial education content and delivery methods specifically for widows was scarce; therefore, the search was widened to include women in general. Content for financial education programs for widows will be addressed first, then delivery methods, and finally widow segment distinctions.

Financial Education Content

Financial education can help a widow to increase her knowledge and reduce her stress. Says Sharon Trusty, suddenly widowed at age 48:

But I realized something important: the more information I had, the better I understood. …

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