Single clients have different financial planning needs than couples do, and this can be especially true for women (whether divorced, widowed, or otherwise single). To demonstrate some of the ways financial advisors can help this growing client base, I was inspired by Bravo’s Real Housewives of New York City—my absolute favorite disaster to watch—to create three theoretical case studies. Use them as you work toward elevating the financial security of your single women clients.

Improving the Client’s Current Financial Situation

Helping a single client involves understanding her individual situation as well as the societal factors inhibiting financial security for women in general.

Address the pay gap. The divide may be narrowing (women earned 82.3 cents on the dollar compared with men in 2020, versus just 57.6 cents in 1966), but it isn’t expected to close until 2059. Here are two ideas to help clients become more fairly compensated:

• Raise their confidence: A strong financial plan, with solid savings and emergency funds, can make clients more comfortable pursuing a higher-paying job or asking for a raise or promotion.

• Strengthen their salary savvy: Consider hosting an expert-run workshop on salary negotiations specifically aimed at women. Remind her to be prepared at salary-review time by documenting significant accomplishments over the past year. And encourage job searching, to see if she can earn more elsewhere.

Provide resources for financial literacy. Consider hosting seminars on financial literacy topics such as buying a home, saving for retirement, or investing. For married clients, make sure they are actively involved in major financial decisions and have access to all financial records.

Meet Your New Clients: Sharona, Tonya, and Lorinda

Now we’re ready for our case studies. These examples are loosely based on Real Housewives, but we’ve changed some details to focus on the core issue—how you can help guide a recently divorced, widowed, or single woman client.

Divorcée: Sharona, 64

Having worked her entire adult life, Sharona has sufficient assets for retirement. She was married to her ex-husband, Luigi, for more than 20 years, and they have a grown daughter.

Social security planning: Since she was married to Luigi for at least 10 years and hasn’t remarried, Sharona is eligible for half of his full retirement age (FRA) benefit amount, and she can collect even if Luigi is not collecting.

Because of Sharona’s significant work history, however, her benefit is higher than Luigi’s, so she won’t get a spousal benefit. This means that maximizing her social security benefits will be based on an analysis of her life expectancy. Generally speaking, if she anticipates living past 80, she will be better off delaying these benefits until she is 70.

Estate planning: After any major life change—particularly after a divorce—clients should review their beneficiary designations. At least 26 states have statutes that automatically revoke beneficiary designations naming a spouse in the event of a divorce—which may not be the outcome your client wants. Divorcées should also revisit estate planning roles, such as attorney-in-fact, health care proxy, and executor.

Other issues: If Sharona remarries, she may consider incorporating a qualified terminable interest property (QTIP) trust in her estate plan. In the case of her death, her second husband could access the income from the trust assets and live in any homes held by the trust. But he would not be able to sell, transfer, or bequeath the assets; instead, those would pass to their daughter.

Single and Childless: Tonya, 57

Tonya is a serial entrepreneur with several successful businesses, including an international lifestyle brand, a line of toaster ovens, and a wine brand. Although she has significant assets, she doesn’t expect to have an estate tax concern, mostly because of her commitment to philanthropy.

Social security planning: Because she’s self-employed, Tonya pays both the employee and employer portions of social security tax. As she approaches FRA, she may be able to boost her benefit by eliminating some of her business deductions for a few years because the amount of social security tax she pays is based on her businesses’ net income. You’ll need to coordinate with her CPA to see if the elimination of some deductions is worth the increase in social security benefits.

Estate planning: Without an estate plan, the state laws of intestacy apply, and Tonya’s assets would go to a parent, sibling, or more remote family members. In Tonya’s case, she would like to provide for siblings, nieces, and nephews, in addition to charities.

Tonya may need a will and a revocable trust, in addition to a valid power of attorney and health care power of attorney drafted. She may want to consider using a corporate fiduciary to act as executor or trustee. Tonya may prefer taking an asset-by-asset approach rather than dividing her estate as a whole to enable her to:

• Make favorite charities the beneficiaries of her retirement assets

• Ensure that her nieces and nephews could inherit her taxable assets (they may be in a higher tax bracket than her siblings and would receive a step-up basis at her death)

• Set siblings up to receive assets that may not get a basis adjustment, such as annuity contracts.

Other issues: Unless she plans to groom one of her relatives to take over her businesses, Tonya should start identifying key employees who could run them after her passing. Executing and properly funding a buy-and-sell agreement can provide assurance that her hard work will endure.

Widowed: Lorinda, 56

Twice married, Lorinda was with her first husband for 10 years and Allard, her second husband, for four years. Lorinda hasn’t worked most of her life, so she doesn’t qualify for her own social security coverage. Since Allard managed their finances, Lorinda was unaware of the extent of their wealth when he passed: he left Lorinda more than $30 million, including a few million dollars in retirement accounts.

Social security planning: As a young widow with a teenage daughter named Anna, Lorinda can access some benefits immediately. Anna could receive a survivor’s benefit until she reaches age 18 or 19, and Lorinda could be eligible for the child-in-care benefit until Anna reaches age 16. Because she remarried, Lorinda is not eligible for a spousal benefit from her first husband.

Estate planning: Lorinda needs to make sure that her estate planning documents reflect the level of wealth she now controls. Allard passed away with more than the current $11.7 million exemption for estate gifts. Lorinda should be certain to elect portability on Allard’s estate.

Let’s say Allard and Lorinda only had $13 million in assets and $8 million of their total assets was in Allard’s name. No federal estate tax would be owed and Lorinda would own the full $13 million. But if the estate tax exemption drops to $6 million next year and Lorinda passes away, her estate would pay taxes on $7 million. If Lorinda had elected portability on the $3.7 million of Allard’s unused exemption amount, her exemption would total $9.7 million and her estate would only owe taxes on $3.3 million.

For planning purposes, I recommend asking any widowed clients whether they elected portability at their spouse’s death, and, if so, how much of their deceased spouse’s exemption was unused.

Other issues: Because Lorinda was unaware of her family’s full scope of wealth, she may need assistance in suddenly managing it. You can help by reviewing all of her family’s finances, walking through strategies she could employ, and helping her plan for the future. How much can she comfortably spend? What sort of legacy does she want to leave?

Making Progress on Financial Parity

Much of what’s covered here can apply to planning for any single clients. For the sake of brevity, I focused on women. By elevating the financial security of your single women clients, you not only help ensure their success, but you’re doing your part to boost financial parity across the gender spectrum.

Commonwealth Financial Network® does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.