“Grief takes time,” writes registered psychotherapist Leah Royden.[1] And if you’ve lost your spouse, your grief can be particularly acute and your recovery prolonged. What makes the situation even more difficult, especially in the immediate aftermath of your loss, is that your financial situation may change drastically.
Consider the following. If your husband or wife was still working, you may lose some or all of your household income. If you’re both retired, you may find yourself with only one Social Security benefit. Your tax rate may rise. You may also have to pay loans your spouse had taken out or that you’d taken out together, such as a car lease or a mortgage.[2]
That’s why you want to be prepared. You don’t want to have to make financial decisions that can possibly have a major impact on your future while you’re tending to your grief and just starting to heal.
More Widows than Widowers
Women are three times as likely as men to lose their spouse.[3] Nevertheless, a key Merrill Lynch/Age Wave study found that 53% of widows surveyed said they and their spouse didn’t have a plan for what would happen if one of them passed away, and 76% of married retirees said they wouldn’t be financially prepared for retirement if their spouse died.[4]
With only 14% of widows surveyed reporting that they made financial decisions by themselves prior to the death of their spouse, there’s a tremendous burden placed on the surviving partner, particularly because half of widows experience a household income decline of 50% or more according to the nonprofit Women’s Institute for a Secure Retirement (WISER).[5]
Additionally, widows are responsible for filing all the necessary financial and legal paperwork following the death of their spouse. Based on responses to the Merrill Lynch/Age Wave survey, this process can include applying for survivor’s Social Security benefits, obtaining a death certificate, filing as beneficiary for a spouse’s retirement accounts, and getting permission to access their spouse’s accounts.[6]
Factoring in Long-Term Care
Studies show that a healthy 65-year-old couple has a 75% chance that one partner will require a significant level of long-term care.[7] With life expectancy for women exceeding that of men by six years (age 81 and age 75, respectively)[8] and the average duration for long-term care for women being 3.7 years as opposed to 2.2 years for men,[9] it’s clear that women are also impacted more often by the death of their spouse in their later years.[10]
From a financial perspective, this may mean widows have to pay for senior home care, assisted living, or nursing home expenses themselves. To put that into perspective, the average annual cost for homemaker services reached $59,488 in the U.S. in 2021, home health aide services averaged $61,776, a single bedroom in an assisted living facility averaged $54,000, and the average cost for a semi-private room in a nursing home was $94,900.[11]
Having to assume sole responsibility for these expenses can be overwhelming for surviving spouses, particularly if such expenses are unexpected.
Have Someone You Can Trust on Your Side
The death of your “other half” is something none of us wants to consider. And yet, it should be an integral part of your financial planning.
You and your spouse want to be working together throughout your marriage to ensure that you’re each prepared to face the financial impacts that would be brought on by the other’s death. As difficult as “what happens if” and “what happens when” conversations can be, it’s imperative for you to have them and to keep one another informed of any changes that occur to your personal finances, from an updated bank account password to the conversion of one retirement account to another.
You also want to work with a trusted advisor, especially during a period of such extreme vulnerability. Your advisor will know your needs, having helped you and your spouse develop a solid plan designed to provide you with the comfort and confidence of knowing your finances are in order so that you can focus on the other aspects of your life that need tending to. Because the last thing you want is to have to make major financial decisions while you’re grieving and just beginning your path to recovery.
That’s true whether you’re determining if you should claim Social Security using your spouse’s work history or your own, how you should manage your spouse’s 401(k) without creating a greater tax burden for yourself, or how to leverage your current married tax status before you’re required to file as a single taxpayer.[12]
At URS Advisory, our mission is to get to know you and to provide you with experienced, caring financial advice that will give you and your spouse financial peace of mind during your life together and will see you through the many challenges you may face in the instance of your husband’s or wife’s death.
Advisory services are offered through URS Advisory LLC dba URS Advisory, an Investment Advisor in the State of Florida (CRD# 289892). Insurance products and services are offered through JEL Enterprises, Inc. dba URS Insurance, an affiliated company.
All content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. URS Advisory does not offer tax planning or legal services but may provide references to tax services or legal providers. URS Advisory may also work with your attorney or independent tax or legal counsel. Please consult a qualified professional for assistance with these matters.
[1] https://www.psychologytoday.com/us/blog/the-mourning-after/201908/traumatic-loss-double-blow
[2] https://www.aarp.org/money/investing/info-2022/financial-plan-for-loss-of-spouse.html
[3] https://www.forbes.com/sites/nextavenue/2018/10/04/preparing-for-the-financial-shocks-of-widowhood/?sh=75fa62e66f06
[4] https://www.forbes.com/sites/nextavenue/2018/10/04/preparing-for-the-financial-shocks-of-widowhood/?sh=75fa62e66f06
[5] https://www.forbes.com/sites/nextavenue/2018/10/04/preparing-for-the-financial-shocks-of-widowhood/?sh=75fa62e66f06
[6] https://www.forbes.com/sites/nextavenue/2018/10/04/preparing-for-the-financial-shocks-of-widowhood/?sh=75fa62e66f06
[7] https://ltcconsumer.com/ltc-facts/statistics/
[8] https://www.cdc.gov/nchs/data/vsrr/VSRR10-508.pdf
[9] https://www.morningstar.com/articles/1013929/100-must-know-statistics-about-long-term-care-pandemic-edition
[10] https://www.morningstar.com/articles/1013929/100-must-know-statistics-about-long-term-care-pandemic-edition
[11] https://www.statista.com/statistics/310446/annual-median-rate-of-long-term-care-services-in-the-us/
[12] https://www.aarp.org/money/investing/info-2022/financial-plan-for-loss-of-spouse.html