Few people want to think about losing a spouse; however, it’s a reality we must confront. The few who do plan for this eventuality may underestimate not only the emotional and physical toll it will take, but also the financial. It’s a known fact that women, on average, live longer than men. Women 65 and older also are three times more likely than men to be widowed (US Census Bureau). In this article, I’ll highlight some steps you can take before and after widowhood becomes a reality to decrease stress and increase your likelihood of financial success.
Planning for When It’s Just You
Losing one’s spouse is an extremely trying ordeal. Whether or not it was expected, the emotional and physical toll can be overwhelming. Add the financial needs this experience imposes and it can be a lot to handle. This is why it’s essential to have an emergency fund set aside for unexpected expenses, such as those associated with the loss of a spouse. According to a survey by Bankrate, 62% of Americans do not have funds set aside for unexpected expenses. Funeral costs and costs associated with settling an estate can be high. A good rule of thumb is to have six months of emergency expenses set aside, or a year if you’d like to be more conservative.
Another reason to set aside emergency funds is because many widows report a substantial reduction of cash inflows after the loss of their spouse. Half of widows surveyed by WISER, the Women’s Institute for a Secure Retirement, reported losing 50% of their income. Imagine an unexpected death immediately halving the income on which you rely. Make sure you investigate what will happen to your income sources upon the death of your spouse, and plan accordingly.
It’s also important to involve yourself in your long-term financial plan. You should have a plan with your spouse, and a plan for when your spouse is gone. This requires a team of trusted advisors, often including a financial planner, asset manager, accountant, and estate planning attorney. Knowing your plan, the values and locations of your assets, and your financial team will help reduce the financial shock and stress upon your spouse’s death.
Advanced Wealth Advisors helps clients prepare for and manage financial life after the passing of a spouse.
When It’s Just You, Your Plan Should Reflect That
According to AARP, it can take anywhere from six months to three years for most widows to report symptoms of anxiety and depression subsiding. Some people never move past the loss. This is why it’s so important to target a strong group of trusted advisors in preparation for this eventuality. A combination of family, friends, and professional advisors can allow you time to grieve, and with less financial stress.
Having such a team also is important because of the vulnerable state grief imposes on people. The FBI reports that financial scams are on the rise, focusing primarily on widowed women over age 60. Prepare to avoid deception by working with an advisor with verifiable credentials like a Certified Financial Planner™, “CFP,” professional. According to the CFP Board, their practitioners “are obliged to uphold the principles of integrity, objectivity, competence, fairness, confidentiality, and diligence.” The CFP Board rigorously enforces these standards.
The most important step in widowhood, however, is to update your financial plan for the future, and to reflect your life and legacy goals. You and your spouse likely had many common goals; but, when you’re solo, you should take another look at things. Did your prior plan designate your spouse to make healthcare and financial decisions for you in the event of your incapacity? Was your spouse the beneficiary of your retirement account, life insurance, or other assets? Have your wishes changed regarding future gifts to heirs or charity? Sit down with your team of trusted advisors to make sure your plan reflects your wishes.
The Bottom Line
There is no solution for all the grief and stress that comes with losing a loved one, especially a spouse. However, by confronting the issues highlighted in this article, you may make the process slightly less burdensome. Setting aside emergency funds, understanding financial ramifications, assembling a team of trusted advisors, and modifying your financial plan to reflect your wishes, will set you up to live the rest of your years confidently and successfully.
To speak with a financial advisor about planning for or managing your financial life during widowhood, contact Soren Christensen and Advanced Wealth Advisors at the phone number or web address below.
(239) 455-1100 | AWAdvisors.com