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More Americans are remarrying later in life. According to a Pew Research Center survey, 50% of previously married adults older than 65 had remarried, and for adults between 55 and 64 the figure was even higher—67% had remarried.1
The challenges faced by widows and widowers entering another marriage can be especially complex, both practically and emotionally. By walking clients through various financial scenarios, advisors can help make the transition to another marriage smoother. Here are a few key things to keep in mind as you meet with clients who belong to this demographic:
Conversation Is Crucial
Clients entering a second marriage may be hesitant to bring up financial issues out of fear of damaging the relationship. Encourage your clients to overcome this fear. Partners who discuss their financial situation, habits and goals can lay the foundation for a healthy relationship and avoid friction over money.
Topics of discussion should include both long-term subjects such as saving and investing strategies and day-to-day matters such as whether and to what extent to merge finances. Credit scores, debt and health costs can be particularly thorny topics. Some couples may have a more productive conversation if it's guided by a knowledgeable third party, so ask your clients if they'd like you to facilitate this important step in their relationship.
Estate planning can get messy for previously married couples—especially for those with children from other marriages. As if the sheer number of potential heirs doesn't make things complicated enough, the intricate emotional bonds between members of blended families can add another layer of difficulty. This is another area your clients should be sure to talk through, both with their spouses and with any children and step-children.
Prenuptial agreements can be particularly helpful in delineating which assets are preserved for children from a previous marriage, and which will transfer to the surviving spouse. Also be sure clients’ beneficiary designations are up to date and reflect their current wishes. Coordinate with clients’ attorneys to develop a strategy that ensures clarity in terms of who gets which assets, and encourage your clients to discuss those plans with their heirs.
Social Security, Pensions and Retirement Accounts
The rules surrounding Social Security, pensions and retirement accounts can be tricky to navigate for widowed clients in a new marriage. If someone who has lost a spouse remarries before age 60, he or she can no longer receive Social Security survivor’s benefits. After age 60, this rule doesn't apply. If your client and/or their new spouse are entitled to their own Social Security benefits, help them work through the possibilities for when to claim which benefits.
There are also age-based rules for military and civil servant spousal benefits. Remarrying widows and widowers lose their pension if their spouse died in the line of duty and they remarry before age 57, while those who were married to civil servants lose their pension if they remarry before age 55. The rules for private pensions and 401(k)s differ from plan to plan, so make sure your clients understand how remarriage will affect this income source.
Each Situation Is Different
While some financial issues must be addressed by all remarrying couples, many will be unique to particular individuals and couples. For example, clients with a child in college who is receiving financial aid must understand that their new spouse's assets may be factored into the child's expected family contribution, potentially limiting their aid eligibility. Other clients, or their new spouses, might need to plan for costly medical care.
Whatever remarrying clients’ financial circumstances, meeting with an advisor might be an important first step toward establishing goals and ground rules for a new marriage. A well-rounded portfolio that includes everything from growth stocks to variable annuities can benefit the vast majority of clients.
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Variable annuities are long-term investments and may not be suitable for all investors. Earnings are taxable as ordinary income when distributed and may be subject to a 10% additional tax if withdrawn before age 59½. Investments in these products are subject to fluctuating values of the underlying investment options, including the possible loss of principal.
There are fees and charges associated with variable annuities which include, but are not limited to mortality and expense risk charges, sales, surrender charges, administrative fees, charges for optional benefits as well as charges for the underlying investment options.
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Great-West Life & Annuity Insurance Company and Great-West Life & Annuity Insurance Company of New York do not offer or provide investment, fiduciary, financial, legal or tax advice or act in a fiduciary capacity for any client unless explicitly described in writing. Please consult an investment advisor, attorney and/or tax advisor as needed. AM458475-0418
 Pew Research Center, "Four-in-Ten Couples Are Saying 'I Do' Again," November 2014.