Women are more than twice as likely as men to lose a spouse to death. For every 1,000 Americans in a given year, 7.8 women become widows, versus 3.5 for men, according to the U.S. Census Bureau (based on 2009). Women tend to live longer than men and often marry older men, which means they may live alone in later years. Some widows may not have managed family finances before. On top of grieving the loss of a loved one, the burden of navigating a myriad of money issues can be overwhelming.
Many marriages thrive on a division of labor, says Derek C. Hamilton, certified financial planner at Elser Financial Planning, Inc. "When the worst happens, the 'non-financial' spouse may suddenly find him or herself in foreign territory without a map. Aside from the overwhelming grief of losing a spouse, coming to grips with the financial aspects of being newly single can leave you feeling ignorant, confused, and vulnerable," Hamilton says.
First: Take Care of Yourself
If you are recently widowed, recognize that you are exhausted and not thinking clearly, says Susan Fulton, founder and principal at FBB Capital Partners. "Sleep, rest, and be with people who love you."
Once you are ready to begin sifting through the mountains of paper that are accumulating on the dining room table, consider this advice: try to avoid making any quick decisions or changes.
"The worst financial decisions are made when people feel they are in the midst of a crisis or in despair about the future, and that’s where many widows find themselves. Investments should be changed only with a plan, a true assessment of comfort level, and never in a highly emotional state. On the other hand, money shouldn’t sit in a checking account for years. As I tell my clients, you still have a life. It’s different from the life you had in the past, but it’s still a life," says Danielle L. Schultz, certified financial planner and principal of Haven Financial Solutions.
Get plenty of death certificate copies. "Every investment and insurance company is probably going to require them," Schultz says. Then, notify Social Security.
"You are entitled to a very small death benefit, and if your spouse’s Social Security payment was higher than yours, switch to your survivor’s benefit," Schultz says. "Every time I give a talk on Social Security, someone either starts crying in the audience or comes up to me distraught afterwards because either they or their mom didn’t know this and has been collecting only their own much smaller benefit for years. If you miss it, it’s not retroactive—you only get it from the time you file a claim."
Next, figure out what you actually own. Are there any insurance policies? "Some of these can be in the bottom of a drawer for years—purchased long ago when insurance was one of the few available investments that the general public could purchase. Don’t reinvest these until you get a chance to formulate your overall plan. Many insurance companies will offer to put them in a money market account for you. Be sure you know what the withdrawal rules are. There’s nothing wrong with putting cash into a savings account until you’re ready to deal with it," Schultz says.
Understand Your Rights and Obligations
Credit card companies and other lenders often try to talk the recently widowed into assuming the debts of a late spouse, Hamilton warns. "Don't do it before speaking with an estate attorney who can explain what your obligations are and what they’re not. You may not have to pay," he says.
Then take a hard look at the numbers. Evaluate how your living expenses may change now that you’re single again. "With new goals and needs, you may find expenses you can cut, while making life easier and happier,” Hamilton says.
Try to find the right balance with budgeting. Comfortable, sustainable spending is the goal, Hamilton says. "Over and under-spending can both be ugly. Don’t feel you have to pre-plan where every dollar goes, but find a good balance where you’re spending enough to meet your true needs and allowing you to express your true self while allowing ‘future you’ to do the same," Hamilton advises.
Take a hard look at your home. "Your home is only an asset if you are willing to sell it. Otherwise it is a store of value, maybe. Even if it is paid for, maintenance and taxes will continue to deplete your investment base. You most likely want to keep it for a year or two while you settle into your new position. This is the biggest financial trap for women. We think it is a safety net, and it is really a Venus fly trap. Try to be objective about where you are and where you want to be," Fulton says.
Hamilton adds, “I’ve had clients who found great relief downsizing to a home or rental that’s easier to maintain in a community that’s more accessible to family and friends."
Remember that it’s okay to ask a lot of questions. Be sure you understand any financial moves you’re making. This includes being smart about taxes. "Your financial advisor, accountant, and attorney may all be able to assist you with tax-savings moves. The advice of these professionals is perhaps never more valuable than when you find yourself suddenly single," Hamilton says.
And last but not least, make sure to address your own health and well-being. "This is probably the time to get your hair and nails done, get a makeup renewal, just anything that is self-care and forward looking and gets you out of the house for something that just might be pleasurable. When there’s such a loss, there’s a temptation not to want to be alive yourself, so you have to reconnect with the world of the healthy living," Schultz says.
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