We really don't like to think about dying, but the fact is women live longer than men. Scientists aren’t certain why exactly but some believe it could be because women’s double-X redundant chromosomes, estrogen, or lots of other factors.1 But the bottom line is that the population of widows is far greater than widowers.
The problem is that too many widows are unexpectedly thrust into a new life, sometimes unprepared to face the financial challenges of going at it alone. The death of a life partner is something no one wants to think about. However, good financial planning and a realistic outlook can give both you and your spouse peace of mind. That planning also has the advantage of shoring up both your retirement incomes if you beat the odds.
During my career transition between software engineering and financial planning, I worked at a non-profit credit counseling agency. I saw first hand how often a widow had limited financial resources to support their retirement. Many widows ended up working multiple part time jobs just trying to make ends meet. I cannot stress enough that women need to plan for widowhood as part of their financial and retirement strategy. Here are three reasons why:
Reason 1: Women Can Expect to Outlive Men by Almost 5 Years2
A higher life expectancy means a married woman is more likely to become widowed and at a relatively early age. For example, in 2011 the median age of widows was 59, with other statisticians claiming the average age was 55 or 56. So that means at least another 26 years of life expectancy (and living/retirement expenses) for the widow.
Reason 2: The Death of a Spouse Is the Number One Stressor3
Even more so than a divorce, the death of a spouse is one of life’s most devastating events. The stress, bewilderment, and deep sense of loss could lead to paralysis and indecision in facing the new financial challenges of getting on with life.
Reason 3: About 25 Percent of Widows Go Through Their Husbands’ Death Benefits After Only Two Months
The poverty rate among elder widows is as much as four times higher than elderly married women. Many widows end up living on their own and need an independent retirement income.
So, the new widow must plan head. Unexpected complications like probate, wills and family disputes can heap additional stress and heartache on top of financial problems.
What Can Women Do to Better Prepare for Widowhood?
Step 1: Organize Your Assets
Don’t wait. Do this now, whatever your age. Gather up those insurance policies, retirement plans, mortgage and list of debts. Write down the account numbers for your bank and broker. Don’t forget your property deeds and titles, powers of attorney, passports, and birth/marriage certificates.
Don’t store anything in a bank safe deposit box that you may need before final probate. Safe deposit boxes could be sealed by a probate court. Those vital documents could be inaccessible before the estate is settled. This advice goes double for wills, copies of which should be notarized and provided to family members.
Step 2: Run the Numbers, Make a Budget, and Grow Your Nest Egg
Information gathering is the first step to knowing whether you will have enough money to get by on after the death of a spouse. The numbers may tell you that you can’t support your current lifestyle if one of the paychecks stops or your Social Security benefit becomes less. Plan accordingly.
Get a handle on your current expenses vs. income. If you are in your high earning years and are now making more than you can spend, start thinking about putting that extra money to work. Look into additional savings and investment plans that you can convert to an additional pension — annuities, for example. And please, do not be afraid to seek out financial advice.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten and Fintentional LLC. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.