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Investment Advisory Services are offered through Bright Futures Wealth Management and/or Cetera Advisors LLC registered investment advisers.  Securities are offered and sold through Cetera Advisors LLC, - A registered broker dealer. Member FINRA, SIPC. Bright Futures Wealth Management and Cetera Advisors LLC are not associated entities. Cetera is under separate ownership from any other company. Bright Futures Wealth Management is under separate ownership from any other company. Perrotto Private Wealth is under separate ownership.

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6 Smart Ways to Financially Prepare for Your Post-Spouse Life

April 10, 2017

 

Even though more women are becoming involved in, and to an extent taking over, the family finances, widowhood remains a significant risk factor when it comes to falling into poverty. More than one in five women 60 and older are living in poverty, and nearly 46 percent of them are widows. According to a survey on WiserWoman , women whose partners died showed that half of them lost at least 50 percent of their income following their loss, and 48 percent had difficulty determining what benefits they were entitled to from Social Security.

 

Given that women, as a group, live longer than men in all developed countries and even in the most undeveloped ones, women outlive men, sometimes by a margin of as much as 10 years. In the United States, life expectancy at birth is about 79 years for women and about 72 years for men. It’s important to be prepared for your post-spouse life and start looking at widowhood as a when, rather than a what if. Here’s what you need to do to remain financially secure this trying time in your life:

Get Involved. If your husband currently handles all of your money, it’s time to change that, and get involved with financial decision making. If you and your husband use a financial advisor, get involved in the meetings, make sure that your both on all of the accounts, adoption agreements, as well as Transfer on Death’s. Usually clients with a dual role are more successful than those with one decision maker.

 

Start Doing Inventory. You should also take inventory of every piece of financial information. This includes a list of all accounts at banks and brokerages, the names of the insurance companies where you hold policies, (as well as the policy numbers and death benefit information), and contact information for your financial advisor, CPA, insurance agent, as well as your attorney. You should also know the location of all of your important documents, the combination to any safes, the location of the key to your safe deposit box, and a master list of computer logins and passwords. A lot of firms now give client’s a folder/booklet to keep all this information together.

 

Get Life Insurance. If you don’t currently have a life insurance policy, it’s worth getting one. Life insurance is the easiest way to replace income after the death of a partner. It’s also tax free, which is a huge benefit. The younger and healthier you are, the cheaper a term life insurance policy will be. For a 45-year-old man with the best health class, a 500,000 20-year term is roughly between 54 and 62 dollars a month depending on the company. A large body of people forgo insurance if they’re young or don’t have children, but this is a huge mistake. The younger you are, the less insurance costs. You could get a whole life policy in your late 20’s to early 30s that covers you the same way a term policy would in your mid-40s.

 

Understand Your Survivor Benefits. After losing a spouse, trying to comprehend what you’re entitled to can be overwhelming. It’s crucial to know what exactly you’re supposed to receive before that day comes. Know your Social Security and pension benefits for both spouses, and have up to date statements. You can log into SSA.GOV to check up to date information about social security benefits.

You are going to want to understand what survivor options you have. This may actually affect your decisions about those items long before your spouse passes. Make sure your beneficiaries are up to date, especially if this is the second marriage for your spouse, and that you have Transfer on Death designations (These are beneficiary designations for non-retirement accounts) and beneficiaries attached to as many assets as possible. Post-death assets are evaluated in probate, a legal proceeding when a will is “proved,” and doing this can keep these assets from being frozen during this process, and can even help reduce probate costs.

 

Consolidate Accounts. A spouse who has many individually titled investment accounts can leave a complex and time-consuming mess for the surviving spouse. The best way to avoid a major financial headache is to consolidate accounts, especially if your spouse has a bunch of like-titled IRA or DRIP accounts scattered around. Every account requires its very own process and documents when the owner or one of the owner passes. The more accounts that don’t serve a real strategic planning purpose, and that can be consolidated into one, means less time and less paperwork to deal with.

 

Work with Your Trusted Independent Financial Advisor — Not the Bank. You may be tempted to let your bank handle everything after your spouse passes, but that could be a big mistake. They make it seem you have to put everything with them, and they line up a salesperson to gather all of your assets and then start selling you products. Instead, consult your financial advisor to prepare both beforehand, and after, the death of a spouse. A Financial Advisor is there to help you PLAN for the future, and give you advice proactively. If you haven’t worked with a financial advisor, accountant or lawyer yet, or if you typically let your husband speak with yours, it’s time to find someone or get to know the person. This will put you way ahead of the game by having a core group of advisors that you already know and trust to lean on when things are difficult. You are going to want to work with an independent financial advisor, and one that is fee based as opposed to commission based.

 

Don't Make Any Significant Life Changes Right Away. While you may be tempted to move out of your home or take that around-the-world trip following your spouse’s death, resist the urge. This goes for making any decision that might affect your finances, from going over budget with your spending to changing your 401(k) contributions. You want to make sure to go through probate, and not to worry about any lingering debts or accounts. You also will need to build a new financial plan based on just your assets and income, as opposed to your spouse and you. A plan that was working in the past may not work now. So it’s important to grasp this new budget, and this new life style.

 

There’s no doubt that losing a spouse is an emotionally devastating event. But given how many women end up financially insecure after becoming widows, it’s crucial to take the necessary steps before a tragedy occurs to protect yourself financially. Having candid money conversations with your spouse and your financial advisor now will ensure a smoother transition into your post-spouse life.

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