According to U.S. Census data, women are expected to live longer than men by roughly four years by 2060. What are the implications of this when it comes to money matters? It means that many women will find themselves responsible for making financial decisions on their own—and potentially for several years—if their spouse passes before them.
The unfortunate reality is that for many women dealing with the devastating grief of losing their spouse, things become even more challenging as they try to process the flood of financial burdens that come their way. While it may be tempting to push money concerns to the back burner if you find yourself in this situation, there are immediate and lasting financial tasks you’ll need to navigate. Here are some things to keep in mind.
Homing In on your finances
You’re in the middle of experiencing a heartbreaking event—it’s possible you may find yourself unprepared to handle the torrent of financial matters falling in your lap. This may be especially true if your spouse was the primary financial planner and investment decision maker in your family. If you’re feeling overwhelmed by financial planning considerations, start by focusing your attention on these topics.
Estate administration
It’s important to obtain several copies of your spouse’s death certificate. You’ll also want to review the status of any existing estate planning documents. Keep in mind, maintaining a list of assets and accounts on an ongoing basis will streamline the estate administration and ultimate distribution of your spouse’s assets in the event of their death.
Contacting the appropriate institutions is a good starting point for knowing what documentation is required to transfer and distribute these assets. Additionally, you may want to familiarize yourself with details such as the 50 percent—or, if you live in one of the nine community property states, 100 percent—cost basis step-up on the value of assets.
Short-term finances
After you’ve finalized your spouse’s estate, you’ll want to start thinking about short-term finances based on your change in situation. For example, you may need to adjust your monthly and yearly budget as well as spending habits. As you evaluate your income needs, keep in mind the social security survivor’s benefit on a deceased spouse’s record is available as early as age 60 to widows who are not disabled. Disabled widows can receive a survivor’s benefit as early as age 50. This can create an early income stream, even though you may not be eligible to begin your own benefit until age 62. (Note that benefit reductions will likely apply for early claiming.)
There are a few things you should know about the social security survivor’s benefit, including that it’s separate from one you may be entitled to receive based on your own earnings record.
Additionally, as the surviving spouse, you can decide when to take your survivor’s benefit versus your own. If your own retirement benefit will be greater than the survivor benefit after the addition of the 8 percent per year delayed claim credit, you could collect the survivor benefit first and then switch to your own benefit at age 70.
If you have minor children, they can also receive Social Security survivor benefits until they reach age 18 (or up to age 19 if they’re still in high school). Children with disabilities that began before age 22 can receive survivor benefits beyond age 18.
If your spouse was the primary wage earner and held life insurance, this can provide another immediate source of income for you. Having a listing of the policies in place can quicken the payout process. If your spouse was still employed at the time of death, be sure to contact their employer about group policies that may also provide a death benefit.
Long-term finances
In addition to getting a handle on your immediate financial needs, you’ll want to think about planning for your long-term financial stability as well. Be sure to review and update your estate plans and beneficiary designations and understand the various health care options available to you (including Medicare and long-term care insurance). It’s important to share your long-term care wishes with those closest to you. While these discussions may be very difficult, it’s important to make loved ones aware of any specific preferences you may have relating to end-of-life medical decisions and funeral arrangements for yourself.
Look ahead and take early action
Managing your finances can be a complex task under any circumstances, never mind when you’re grieving. Speaking with a tax professional, attorney or financial advisor can help you understand your options and find solutions that work best for you.
By taking steps to gain a more comprehensive view of your finances, you can position yourself for a stable financial future.
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.
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Joelle Spear is a financial advisor and Partner located at Canby Financial Advisors, 161 Worcester Road, Framingham, MA 01701. She offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. She can be reached at 508.598.1082 or jspear@canbyfinancial.com
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