Tips to help protect Non-Traditional families facing retirement planning hurdles
Extra Help for Those at a Disadvantage, According to MetLife Study
New York, NY . – The MetLife Mature Market Institute® is making a series of tips available to consumers, particularly those who are not in “traditional families,” to help them make the right choices about how to prepare for retirement, despite the challenges they face. “Family Matters: Retirement Preparation Tips for Different Family Types” follows the Institute’s recent Family Matters study which reports that planning for retirement is tougher and more complicated for middle-aged Americans who are married with children from previous relationships and for single women.
“These tips are designed to provide guidance to people in different family situations prepare financially for their own retirement, as well as for the financial future of their children, stepchildren and ex-spouse, if applicable,” said Sandra Timmermann, Ed.D., director of the MetLife Mature Market Institute.
“There are many financial variables for those in ‘blended families’ -- those with two parents and at least one child from a previous relationship. Many may be paying for college tuition, weddings and health and dental care. They are responsible, not only for their own children, but for their stepchildren as well, further taxing their ability to save for retirement and to have adequate lifetime income. Single women have additional challenges, since they must depend solely on their own resources,” said Timmermann.
The following retirement preparation and asset protection guidelines, categorized according to family structure, can benefit consumers from all kinds of families:
• Determine whether or not your ex-spouse will rely on you for support in retirement.
• Communicate on matters related to your children and who will pay for college, a wedding and health care.
• Understand the laws in your state regarding asset division – who gets what.
• Consider establishing a living trust to protect assets that are designated for your children to prevent an ex-spouse or anyone else from having access to assets.
• You can establish a bank account that is payable on death to a child, spouse or any individual you designate so probate may be avoided.
• When purchasing a home with your current spouse, consider who will be named on the deed, which affects how funds are distributed upon sale of the property.
• If you or your spouse have children from a previous relationship, consider whether you want your new spouse to adopt your children or become a guardian to establish important rights related to care, parenting and financial responsibility.
• Know your risk tolerance. Since single women do not have a spouse with a second income, it’s important to know what you can tolerate.
• Consider establishing a living trust to protect assets that are designated for your children. A trust will prevent an ex- or future spouse from having access to the assets. Trusts can be established for many purposes. Some examples include child support, education, special needs and medical purposes.
• You can establish a bank account that is payable on death to a child or any individual you designate, possibly as a way of avoiding probate.
• Consider obtaining a prenuptial agreement if you decide to marry, which may protect your assets for your children.
• If you have children and decide to remarry, consider whether or not you want your new spouse to adopt them or become a guardian. Make sure your will designates who will care for your children.
Traditional and All Families:
• Ensure that your financial plan includes products that provide lifetime income.
• Update your beneficiaries on all your retirement plans and insurance policies. Retirement assets and life insurance typically go to the beneficiary, regardless of whether or not you re-married.
• Decide how you want to structure your retirement savings. Some couples wish to consolidate while others like to keep separate.
• Have a meeting with each other and talk through your financial differences to set goals and spending budgets so you are in agreement on income needs and how to spend during retirement.
• Learn about your pension and what rules apply to your pension and retirement savings.
• Know your Social Security game plan. Work through the numbers and decide if it’s more beneficial to draw Social Security benefits through your spouse’s working years or your own.
• Consider age when planning and buying protection products, such as long term care insurance.
The Family Matters survey determined that single women and those with blended families feel less prepared for retirement than their counterparts with traditional families. They say it is significantly more difficult for them to save for retirement and to make contributions to their retirement accounts. Fewer than half (42%) of Single Women own 401(k)’s, compared with 58% of Blended Families and 70% of Traditional Families.
Roughly one in five blended families and single women (19% and 18%, respectively) are concerned that they don’t have safeguards to ensure that an ex-spouse will not lay claim to their income or savings meant for themselves or their children. Single women report specific challenges, including the fact that they lack the safety net of a second income that their married peers have. In addition, among survey respondents who are working, single women were more likely than their married counterparts to be working only part-time.
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