Preparing for Widowhood

Life ends with only one possible conclusion: death. And while no one wants to spend any more time than necessary thinking about that outcome, basic steps taken now can help avoid adding the confusion and frustration of estate finances to the pain of losing a spouse.

In some households, one spouse handles bills and the other investing, or they address those issues and tasks together. If you are in one of those households, congratulations. You probably have the insight and information you will need to keep up with your finances should your spouse die first.

Among other couples, a single spouse takes the lead in handling money matters, and men are often more involved in finances than women. But you should keep in mind that women typically outlive men – 80 percent of women will die single, according to information published in 2012 on the Illinois Department of Financial & Professional Regulation website. The average widow is just 56 years old.

The perfect time to start preparing for taking care of the finances on your own is while your spouse is alive and well, because you have your partner there to discuss your financial situation and understand your total financial picture. Maintaining at least a big picture of the household finances can help the surviving spouse feel less confused and overwhelmed when a spouse dies or is no longer able to handle those responsibilities. At a minimum, know how much money is coming in and how much is going out each month – and where it’s going.

Put together a file of copies of your most important documents and keep it someplace easy for you to find. On each copy, note where the original is kept. This file should include copies of birth certificates for both of you and any dependent children, your marriage license, the deed to your house, military discharge papers, a list of assets, insurance policies, wills and medical powers of attorney. The originals should be kept someplace safe, but not necessarily in a safe deposit box. Some states seal the contents of a safe deposit box at the time of death, which will mean those documents aren’t available to you when you need them.

You may want to discuss with a Certified Financial Planner the death benefits available from pensions, retirement plans and Social Security as well as how other accounts will transfer. You need to know that when your spouse dies, you will have funds to cover immediate living expenses as well as funeral arrangements. By having a plan in place ahead of time, you can avoid the additional stress and anxiety of dealing with bills while you’re grieving.

FINANCIAL FACTS

What Keeps You Up At Night? – More than three out of every five Americans surveyed (61 percent) between the ages of 44-75 fear running out of money during their retirement years more than they fear death (source: Allianz, BTN Research). 

How Long? – Unemployment benefits vary widely by state. Most states pay an initial 26 weeks of unemployment benefits before federal assistance kicks in. Unemployment benefits (from both sources) can be received for a minimum of 40 weeks up to a maximum 73 weeks depending upon the unemployed worker’s state of residence and the current unemployment rate in that state (source: Center on Budget and Policy Priorities, BTN Research).

The Wrong Direction – There were 16 American workers for every one Social Security retiree receiving benefits in 1950. It is estimated that there will be just two American workers for every one Social Security retiree receiving benefits in 2035 (source: Social Security Trustees 2012 Report, BTN Research).