ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Monday, January 29, 1996 TAG: 9601300010
SECTION: MONEY PAGE: 6 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
Nearly 30 percent of the American population is single - people with unique financial problems, according to David Cissel of Financial Solutions in Roanoke.
The suddenly single face the added "emotional turmoil of a sudden shift in lifestyle."
In a typical marriage, he said, one partner focuses on finances. If the less responsible person is suddenly widowed or divorced, he said, that person "is up in the air."
"I think a budget is certainly important," said Cissel, a fee-only certified financial planner.
Also important is long-term planning, especially in a divorce. That means a woman who hasn't worked outside her home should request resources to get an education. Partners should also be aware that they can obtain court orders for sharing of pension payments at retirement.
For the suddenly single, he said, it's important not to rush into investments or be pushed by sales people into unwise investments. "Educate yourself" about money, Cissel said.
An emergency fund is more important for any single person than it is for a couple, Cissel said. He recommends that his single clients keep in easily accessible accounts an amount of money equal to six months' living expenses, advice generally given anyone dependent on a paycheck.
He also believes that renting housing is a more viable option than buying a house when a person is single. The person has less need for space unless there are children, he said, and it avoids tying up money in the illiquid investment of a house.
If you are suddenly single, he said, your first task is to locate all important papers such as tax records and insurance papers.
Make a list of all bank accounts, he said, and be sure they they are put immediately into the name of the new owner.
Look for insurance papers, he said. If you are widowed, you will have to file a claim. If you are divorcing, you will want to change the name of the beneficiary quickly.
Revise your will or write your first will, Cissel advised. That's because you are facing a dramatic shift in your future.
If you are divorcing, make sure all joint credit card accounts are closed and the cards destroyed or you could be liable for your estranged partner's new debts. If you are widowed, transfer the cards into your name.
Notify all creditors of your change in status, he said, and change all deeds, stocks and bonds into the proper names.
If you are widowed in retirement, Cissel said, notify Social Security and a former employer paying a pension. You may be tempted to pocket this money, but Cissel pointed out that you will liable for repayment and perhaps penalties when you are discovered.
The Institute of Certified Financial Planners said any single person should learn the basics of money management, even if you're working with a financial professional. This is especially important if you are widowed and have an insurance settlement in hand. People with new-found money, the institute said, are "especially vulnerable to scam artists - or well-meaning friends."
The Institute added other points for singles:
Draw up a budget because clothing, entertainment and credit cards are tempting, especially to young singles. You need to start saving for a home and investing for retirement.
Singles with children may need to move to a smaller house and avoid over-indulging those kids. If the children are old enough, involve them in budgeting.
Buy disability insurance unless you're already retired. Without a partner to share financial responsibilities, a single person unable to work because of a disability can get into financial trouble quickly.
Your employer or Social Security may provide some benefits in case of a disability, but you probably need more and better coverage.
Buy health insurance, at least for catastrophic events, unless you're adequately covered through work or Medicare. If you're over 65, get a Medigap policy to supplement Medicare.
If you're between jobs, continue coverage under your former employer or purchase short-term health insurance. If you're divorced, make sure the children are covered by one spouse.
Not all singles need life insurance, but it's essential if you have children. Be sure an ex-spouse providing child support is covered too.
Minors can't collect insurance proceeds. Therefore, your will should establish a trust as a beneficiary so the money can be managed for their benefit until they reach adulthood. Pick a friend or relative to serve as trustee, preferably sharing responsibilities with a bank or financial adviser in case your choice turns out to be incompetent or untrustworthy.
With the costs of daily living, it's easy for singles to neglect saving for retirement when you will be alone.
Maximize use of your employer's retirement plan. If you're self-employed, set up a simplified employee pension plan.
Singles need health care proxies and durable powers of attorney. Without a spouse, you'll need someone authorized to make medical and financial decisions on your behalf if you should become physically or mentally incapacitated. Pick a trustee and professional oversight.
Engage in estate planning.
For singles with minor children, be sure your will names a guardian. If it's someone other than your spouse, you will have to make a case for your choice in writing beforehand. You may want to name a separate person to manage your children's inheritance.
Singles over the age of 50 might want to consider buying long-term care insurance to cover nursing home or home health care costs.
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