Beyond Ozzie and Harriet

A few clicks of a television remote reveal a lot about the American family in 2009. In place of the images portrayed in the 1950s shows Father Knows Best and The Adventures of Ozzie and Harriet, we now have The New Adventures of Old Christine, which follows the travails of a single mother, and Modern Family, which includes a male couple who adopt a baby girl from Vietnam.

America is a more diverse country, and financial planning is evolving to meet the needs of a more disparate group of clients. Many basic concerns, such as the need to start saving early for retirement, are the same for traditional and less conventional couples. Other problems are quite different, including the treatment of Social Security payments. Here's how some couples are addressing crucial financial issues.

GAY PARTNERSGay couples across the country face financial planning challenges, especially since state laws treat gay marriage so differently. For instance, like any married couple, David Hamilton and Bernie Erickson want to protect each other financially in case of one of them dies or gets seriously ill. Hamilton, a music professor at Concordia College in Moorhead, Minn., and artistic director of the Fargo-Moorhead Opera, lives in Fargo, N.D. His partner is a vice-president for Macy's (M) in Fargo. They married in Canada in 2006, but North Dakota doesn't recognize gay marriage. The two own a home together. They also carry life insurance on each other and for children they have from previous marriages, whom they want to protect as well.

To deal with situations like this, gay couples typically rely on trusts more than conventional couples do. There aren't real tax advantages, but it's a legal device that protects the partners and is hard for family members to contest. Hamilton and Erickson have hired an attorney to draw up a trust for each of them, which will include their home, vehicle, and other assets. "It's a more secure way of making sure our wishes will be followed," says Hamilton.

Another major financial and emotional issue in the gay community involves income and asset inequality within marriage. A partner with little income and assets is highly vulnerable. For instance, Social Security doesn't recognize gay marriage. Neither does federal law. So in a gay marriage, if the surviving spouse is the low earner, he or she doesn't benefit from the high earner's Social Security payments. If a high-earning woman and a low-earning man divorce after being married for more than 10 years, the divorced man (if he doesn't remarry) will benefit from his former spouse's higher Social Security payments.

A common solution is for the wealthier partner to gift the maximum every year to the spouse. (For 2010, that's $13,000.) Over time these irrevocable gifts can allow the less-well-off partner to build substantial assets. "I really push clients to think through sharing risk equally," says Ann Viitala, a Minneapolis attorney who specializes in working with nontraditional families.

SINGLE MOMMany single moms struggle financially, even if they get child support and alimony. "Finances are so far down the list of things to do," says Julie Schatz, a certified financial planner (CFP) in Menlo Park, Calif. "It's always an 11th-hour scramble with money."

Rachel Swardson-Wenham couldn't agree more. She had her third child and soon after launched a business with $17,000 in 2008—just as her husband left her. She lost her home to foreclosure and moved into a much smaller place. Money is tight. She sold her wedding ring to meet expenses for her business, Go Home Gorgeous, which offers a spa-type experience for women in the hospital after giving birth.

For single parents, life insurance is the big priority. A term policy that lasts 15 to 20 years or until the children are grown is more than adequate. For instance, a healthy 40-year-old woman in Massachusetts could get a 20-year policy with no change in annual premium payments for $700 to $900 a year, or $58 to $75 per month. Also crucial is a will that provides for guardianship of children.

Long-term disability insurance is important as well. It's really paycheck protection, or more accurately, partial paycheck protection. Disability insurance replaces a portion of your income if you can't work because of an illness or injury. A typical group plan policy is cheap as part of an employee's benefits package, costing the employee nothing to a few dollars a month. An employer's policy usually replaces up to 60% of salary, and highly compensated employees often pay for supplemental coverage offered through their employer or buy an individual policy to boost coverage by an additional 10% to 20%. It's much more expensive to buy an individual policy if your employer doesn't offer one—usually about 3% of your annual salary.

After paying those bills, finding the money to keep saving may seem difficult. But Rick Brooks, a CFP with Blankinship & Foster in Solana Beach, Calif., urges single mothers to try. He recently put together a plan for a friend who is a single mom. Working through a temp agency, she had had three jobs over three years. He encouraged her to set a goal of putting aside enough money to meet two years of expenses. "From my perspective, unless you have a very stable job, single moms really need to focus on building up rainy day funds and paying down debt," says Brooks.

TRADITIONAL COUPLEThe rules of thumb for traditional couples are often inadequate for dealing with blended families, older boomers with young children, and marriages with a significant age difference between partners. For instance, for couples who are about the same age, it often makes sense to reduce sharply or even eliminate life and disability insurance policies as retirement nears and the children go off on their own. But for late-age boomers with young children, eliminating life and disability coverage doesn't make sense. They may also need to plan on retiring later, perhaps not until age 70. That way, their savings will compound longer and they'll have some income to help out with college expenses.

It's not unusual today for an older husband to be thinking about retirement while his younger wife's career is going gangbusters. And an age difference can affect something as basic as deciding when a spouse should start taking Social Security payments. That was the case with David Perlmutter and his wife, Kathy. The 63-year-old Palo Alto (Calif.) entrepreneur sold his business,, in 2007 and decided to retire a year ago. His wife, 52, continues to work as a vice-president at the health-care information technology company Cerner (CERN). She contributes the maximum into her 401(k) plan to minimize current taxes. But David decided to start taking Social Security. His reasoning: They have two children under age 18. Since he is retired and claims the children as dependents on his taxes, each child gets $9,000 from Social Security. The total annual family benefit from Social Security is $36,000.

Perlmutter exemplifies another trend some might label unconventional but that's becoming more common—the stay-at-home dad. And, as women have long noted, remaining home with the kids can be a full-time job. "My wife works all the time," says Perlmutter. "It isn't really retirement, since I do all the cleaning, cooking, and taking care of the kids. It's funny how roles have reversed."

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