In her new book A Widow's Story, author Joyce Carol Oates writes about losing her husband of 48 years. Amid the grief, guilt, and learning how to live again, the topic of losing a spouse also raises financial challenges, which can compound the trauma of the experience. If your deceased spouse balanced the bank accounts, then how will you do so without him? If she paid the monthly bills, will you be able to take over? If the primary breadwinner died, then can the survivor find a way to earn more income?
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Oates' searing memoir raises these delicate questions and more about life after the death of a spouse. Here are tips from financial experts about coping with this kind of loss:
1) Look for ways to replace lost income. If earning additional income isn't possible or ideal, then consider advance planning with pensions or life insurance to anticipate lost income. Some pension plans allow employees to opt for lower payouts while they are living in exchange for higher survivor's benefits after death, which leaves more for the surviving spouse. Mary McGrath, executive vice president at Cozad Asset Management, a financial planning firm in Champaign, Ill., says even couples with other assets should consider selecting an option that allows benefit payments to the surviving spouse after death, because suddenly losing all income adds unnecessary stress to the grieving process. "It's too upsetting to the survivor to have all of the income cease when you die," she says.
2) Find your trusted person. Catherine Collinson, president of the Transamerica Center for Retirement Studies, says that single seniors need someone who is able to make financial decisions for them in case they become unable to. She has served as her grandmother's "trusted person," as she calls it, ever since her grandfather passed away. Collinson's grandmother also added her granddaughter's name to all of her bank accounts to make it easier for Collinson to access and manage them in case of an emergency. As a result, five years ago, when her grandmother had a stroke at age 92, Collinson was able to easily step in to pay her grandmother's bills and manage her accounts.
3) Manage risk. Studies show that women tend to invest more conservatively than men do, which means spouses tend to balance each other out, says Dave Hinnenkamp, president of kdv Wealth Management, a financial planning firm in St. Cloud, Minn. When women become widows, they tend to be overly cautious in their investments, which opens them up to inflation risk. If they are 100 percent invested in bonds, for example, they could outlive their savings. Widowers have the opposite problem and tend to invest too aggressively.
4)Delay big moves. When financial planner Mark Colgan's wife died suddenly at age 28, he realized that he wasn't the only one who could use help during such a stressful time. Within hours of her death, he had to make decisions about her funeral arrangements and burial, and in the months that followed, he found it difficult to open mail with her name on it, including credit card bills. As a result of that experience, he started a company to help people in his situation called Plan Your Legacy and wrote The Survivor Assistance Handbook: A Guide for Financial Transition.
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Colgan says he often sees people rush through decisions, such as selling their homes or shifting investment holdings, shortly after the death of their spouse. "Grief is so painful, they want to get it over with," he says. While certain bills and funeral expenses need to be taken care of relatively quickly, selling a house or changing ownership on bank accounts can wait, he says.
5)Protect yourself. Michael Goshorn, who started the website widownet.org after his wife died in 1993, says that fraudsters sometimes prey on widows and widowers, whom they identify from newspaper obituaries. "You are especially vulnerable after you lose a spouse," says Goshorn, of Fort Collins, Colo.
The Better Business Bureau has received reports of fake insurance agents who tell widows and widowers that their deceased spouse's life insurance premium was delinquent and that they must pay thousands of dollars for the insurance funds to be released.
6) Keep a paper trail. Alexandra Armstrong, a financial planner in Washington and coauthor of On Your Own: A Widow's Passage to Emotional and Financial Well-Being, recommends keeping a file drawer for paperwork related to the estate of the deceased spouse as well as one dedicated to the surviving spouse's accounts. For some of her older clients who have trouble keeping track of all their paperwork, she recommends hiring a personal money manager, who gets paid by the hour to handle bills during a home visit.
As Oates demonstrates in her book, losing a spouse can change everything. Being financially prepared can offer some comfort amid the grief.
Kimberly Palmer is the author of the new book Generation Earn: The Young Professional’s Guide to Spending, Investing, and Giving Back.