Don't Leave Your Surviving Spouse in Dire Straits
The death of a spouse has wide-ranging financial ramifications. Here are eight moves you could make right now to help ease some future burdens on the one you love.
![](https://cdn.mos.cms.futurecdn.net/YBrAmemx9nxm9vd5hx4YhJ-415-80.jpg)
Households with a “breadwinner” and a “homemaker” still exist in the United States, but they’re increasingly rare.
According to the Bureau of Labor Statistics, both the husband and wife were employed in 48% of married-couple families in 2016.
Our economy has adjusted accordingly. That second income isn’t necessarily for luxuries anymore — it takes two to maintain the lifestyle most Americans hope to have, with a house, two cars, college for the kids and a vacation every year.
![https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-200-80.png](https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-320-80.png)
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Those lifestyle expectations and costs don’t change much in retirement, despite what you may have heard. We all still want to have a nice home, to travel and to help our kids. Those are the goals we build a retirement plan around. And with two Social Security checks, possibly two employer pensions and two 401(k)-type plans, it’s usually doable.
But without proper preparation, when one spouse dies, it can throw that plan way off track.
At the very least, one Social Security check will go away, which could be a major hit to the survivor’s monthly income. Just because both spouses were working doesn’t mean they earned the same amount — or that either was earning a lot. For many couples, that benefit is an essential part of their income plan. The Social Security Administration says that among elderly beneficiaries, 50% of married couples and 71% of unmarried people get half or more of their income from Social Security. (For 23% of married couples and 43% of unmarried people, that number is 90% or more.)
But there are several proactive steps you can consider now to help ease the surviving spouse’s financial burden later, including:
- Buy life insurance. Some people believe you don’t need life insurance in retirement because investments and pensions will provide a steady source of income, regardless of the death of either spouse. But that isn’t always the case. If someone will experience a financial loss when you die, life insurance can help fill the void. And the money is typically income tax-free.
- Take the survivor benefit on your employer pension. If you and/or your spouse will receive a traditional defined-benefit pension, you’ll be asked to choose the type of payment you want when you retire. The single-life benefit offers larger payments, but they’ll stop when the pension-plan member dies. With the survivor benefit, payments will be smaller, but it guarantees a steady stream of lifetime income for both spouses. Ask your plan administrator how much you would receive under each option. (There also may be an option with reduced survivor benefits.)
- Save more to your traditional or Roth IRA. If you want to have more money in retirement, you’ll have to save more. Balance your current needs against the lifestyle you’ll want. Perhaps you can do with one less latte each week or carry an older handbag if you think about those savings as money that’s growing for the future.
- Be cautious regarding how and when you claim your Social Security benefits. Married couples have myriad options for taking their benefits. You can get basic information from the Social Security Administration, www.ssa.gov, but to make the most of your filing strategy, talk to your financial professional.
- Create a hypothetical budget. Think about the expenses you’ll still have as a widow or widower, and create a budget around that — then see if you can actually live on it while you have the extra income, and save what’s left. What expenses can you eliminate? What debts could you pay off? Get your costs under control sooner rather than later.
- Turn a hobby into income. Many people look forward to spending more time on their hobbies in retirement. Perhaps you could turn your love of carpentry, gardening or golfing into a part-time job or an entrepreneurial opportunity.
- Downsizing. If your longtime home is too big now that the kids are gone, perhaps you could sell it and use the equity to buy a smaller place – one that will be more manageable if there’s only one person living there. You could even take it a step further and relocate to a state that’s more tax-friendly. (Just remember that the surviving spouse may want to be close to family when one of you dies.)
- Make sure your beneficiaries are updated regularly on all paperwork. You can save your surviving spouse a lot of heartache and financial worries by paying attention to your paperwork. People often get so busy they procrastinate or simply forget to change the beneficiary on an old retirement account to their current spouse (even if they’ve been remarried for years). Battles ensue. Talk to your plan administrator and/or financial adviser about making things right.
Couples spend a lot of time dreaming about retirement and all the great things they’ll do together. That’s the joy of growing old with the one you love. But you also should spend time talking about what will happen if one of you is left alone, and how to make that stage of life as comfortable as possible.
Kim Franke-Folstad contributed to this article.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Charles Ragonese is president of Mountain Peak Financial Inc., which he founded in 1992. He is a licensed insurance agent and has passed the Series 65 exam and is an investment adviser representative in California. Ragonese also holds the designations of Chartered Retirement Planning Counselor (CRPC) and Certified Fund Specialist (CFS), and is a member of the National Association of Insurance and Financial Advisors (NAIFA). Mountain Peak Financial, Inc. focuses on retirement planning. Investment advisory services offered only by duly registered individuals through AE Wealth Management LLC (AEWM). AEWM and Mountain Peak Financial Inc. are not affiliated companies.
-
Stock Market Today: Dow Outperforms After IBM Earnings
Investors also parsed a strong reading on second-quarter GDP and a dismal decline in durable goods.
By Karee Venema Published
-
Try the 6 to 1 Grocery Shopping Method to Save Time and Money
The 6 to 1 Grocery Method can help you save money, reduce waste and eat healthier.
By Erin Bendig Published
-
If You're the Millionaire Next Door, You May Be a Terrible Spender
Good job on all that great saving. Now you need to start spending some of that hard-earned retirement savings on the things you love.
By Joe F. Schmitz Jr., CFP®, ChFC® Published
-
Who Will Be the Beneficiaries of Your Wealth?
Deciding who you want to inherit your wealth, as well as when and how, is a crucial first step in estate planning. Here are the four beneficiaries to keep in mind.
By Adam Frank Published
-
Confused by Annuities? Making Sense of the Different Types
Many investors aren't sure if annuities are a good option for meeting financial goals. Let's look at the different categories, along with their pros and cons.
By Kris Maksimovich, AIF®, CRPC®, CPFA®, CRC® Published
-
Talkin' 'Bout My Generational Wealth: Baby Boomers
With retirement, each generation has different priorities and challenges. For Baby Boomers, it's a matter of ready or not, here it comes.
By Alvina Lo Published
-
How to Avoid a Big Hassle if Your Financed Car Gets Wrecked
How an insurance check is made out for repairs can cause a world of problems if the lienholder is left out.
By H. Dennis Beaver, Esq. Published
-
Estate Planning Strategies to Consider as Election Nears
Are big changes in tax laws coming soon? Not likely, but you might want to take advantage of higher estate and gift tax exemptions well before the end of 2025.
By David Handler, J.D. Published
-
How to Get Your Money's Worth From Your Financial Adviser
A good financial adviser will focus on how your financial planning and investment strategy align with your lifestyle and aspirations.
By Pam Krueger Published
-
Think of Prenups and Postnups as Financial Planning Tools
These contracts provide a clear framework for asset management and protection and are especially useful if you get married later in life.
By Andrew Hatherley, CDFA®, CRPC® Published