Navigating Your Finances After the Loss of a Spouse

The loss of a spouse, even when long anticipated, can be devastating. The surviving spouse is suddenly without a partner they’ve loved and enjoyed for years or decades. Family and friends can be wonderful emotional sources of support during this time—but the death of a spouse also has legal and financial ramifications that obligate us to act and make crucial, time-sensitive decisions during our time of grief. 

And the truth is, the burden of widowhood tends to fall most heavily on women due to their longevity advantage over men. According to AARP, among married Americans, 58% of women age 75 and older experience widowhood, compared to 28 percent of men.

This discussion is an opportunity for women to ensure their continued financial stability and independence by proactively implementing a plan to navigate the implications of losing a spouse. 

First Steps 

The first response after the death of a spouse should be to contact family, friends, and, if relevant, clergy and your deceased spouse’s employer. Next, take action on any funeral and/or memorial arrangements you or your spouse want. Once these immediate steps are taken care of, you can shift focus to taking legal and financial action.

Next Steps 

Gather documentation. You’ll likely need to track down: 

  • Your spouse’s will 
  • Any benefits statements like veterans’ benefits or Social Security 
  • Insurance documentation, especially life or burial insurance
  • Your marriage certificate (you’ll likely need multiple copies)
  • Your spouse’s death certificate, when it’s available (again, we recommend multiple copies) 

A family attorney may handle some of these documents, but most are usually the surviving spouse’s responsibility.

Next, you’ll need to contact: 

  • Workplace benefits professionals to make sure you have all the information necessary to file for your spouse’s benefits  
  • An insurance agent to start the claims processes for any policies covering your spouse 
  • An estate attorney, if you work with one
  • Financial advisors and brokerage representatives who will start contacting the custodians and broker-dealers where accounts are held in your spouse’s name 

Revisiting Your Financial Plan 

After the death of a spouse, you’ll eventually need to revisit all of your financial plans, as you’re going to transition from planning as a couple to planning as a single person in what may now be a single-income household. Even retired widows have to deal with changes in tax brackets and Social Security upon the death of their spouse. 

For example, surviving spouses qualify for full survivor Social Security benefits, as do most children under the age of 18 or 19. Widows and widowers cannot receive both the full value of their survivor benefits plus their own benefits, as Social Security will only pay you up to the value of the larger benefit—so you’ll have to adjust from two Social Security benefits to receiving just one, usually the greater of your benefit or your spouse’s. 

Luckily, if you’ve taken care of the financial issues in the immediate aftermath of your spouse’s death, you already have your documents organized and information on any accounts and investments. 

Eventually, you’ll revisit the beneficiary forms on your accounts and insurance policies and decide whether to change your estate plans. You’ll also want to revisit your income and expenses. Losing a spouse can lead to lower expenses, but the loss of income is usually larger than the reduction in expenses. 

Death and Taxes 

The two tongue-in-cheek certainties of death and taxes are inextricably linked. When one spouse dies, the surviving spouse must transition from filing as a married couple to filing as a single person. Not only does this often mean a jump in tax brackets, but it can also mean new or higher taxes are levied related to Social Security or Medicare benefits. It can change how the required distributions from any retirement accounts are taxed. Sometimes colloquially called the “widow’s penalty,” this change in tax brackets can result in less income but higher taxes for a surviving spouse. 

Revisiting Your Financial Life 

Widows have deeper issues still to ponder. You’ll need to consider what will happen to the family home—do you still need all that space? Would moving closer to adult children, friends, or activities you enjoy make sense? There is no single right or wrong answer to these questions; it all depends on what makes you happy and your financial resources.

If you’re still working, is this perhaps a time for a change, be it retirement, a sabbatical to work out your future, or a new job or career? 

You’ll also have to consider any minor or dependent children who may be involved and how they will be cared for.  

The key to navigating the loss of a spouse successfully is to be prepared. Talk to your spouse or partner now to ensure you’re on the same page. Make sure you understand where your household’s money is and how it is being used. If you already have a financial advisor working with your household, both spouses should be attending meetings. If you still need a financial advisor, find one who wants to work with both of you as a couple, household, or family, and not just one of you as an individual. Ensure the loved ones you may leave behind know everything they need to know about your family’s money matters. 

Tools For Surviving Spouses 

You’re Not Alone 

Upon the death of a spouse, it’s far too common for the widowed spouse to be left without the information they need to handle their household’s changing finances successfully, let alone the transition to widowhood and all it entails. But financial advisors are well-equipped to help. 

Ryan Ledden, president of Black Oak Asset Management, regularly works with clients anticipating or dealing with the loss of a spouse. 

“One was a widowed client who had lost her husband to cancer and needed to make several major financial decisions. We had to untangle a complicated financial knot that included pensions, life insurance, and decades-old company benefit packages. I couldn’t imagine how hard it would have been for her to manage all that by herself,” he said. “If you find yourself facing similar issues following a loss or other life changes, you are not alone. Help is available.” 

If you’re worried that your family is unprepared to handle the loss of a spouse or partner, we’re ready to help you have the conversations necessary to make sure all your bases are covered, offering you and your loved ones peace of mind for the years to come. 

Schedule a consultation today or contact us to learn more.