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Prepare for the monetary shock of widowhood

When you lose your mate, you lose so much—your best friend, your equilibrium, your future together. And just when you’re at your lowest, it hits you: You could lose a lot of money, too.

Your finances may crash in myriad ways just when you’re dealing with grief. Among them:

  • If your spouse was still working—and the average age at which women become widowed is 59, according to the Census Bureau—you may lose much or all of your household income.
  • If you’re both retired, your household may go from two Social Security benefits down to one.
  • Your tax rate may rise, now that you will be filing as single.
  • You may lose access to credit cards you thought were yours but that were established under your spouse’s name.
  • Availability to savings, retirement accounts and investments could be delayed or even blocked if beneficiary information wasn’t properly filled out.
  • You may miss out on expected inheritances if your spouse was unlucky enough to die before his or her parents did.
  • You may need to pay someone to do the many things your spouse did for you, from lawn care to home maintenance.
  • If you’re widowed from a second marriage, your spouse’s assets may go to first-marriage children, not you.

Of course, the best time to deal with all of this is before the death. Financial advisers are comfortable doling out reams of pre-death planning advice: Update your beneficiaries on all your accounts! Get adequate life insurance! Make a list of accounts and passwords and monthly payments to be made! But after he’s gone? Not so much. (Note that it is usually a “he,” as 58 percent of women and 28 percent of men 75 and older are widowed. I’ll use those genders when writing this, but it applies to all.)

After he’s gone, there’s more pain and fewer options. “I think a lot of people become widowed and lose their mooring so much that they can’t manage the decision-making,” says Karen Altfest, a New York Employee who works with older female clients. But the situation isn’t hopeless, and these financial strategies can protect your bottom line while you navigate your new future and your grief.


Even if you’re a DIY person when it comes to your money, it helps to have a professional look at your whole new financial life. Which accounts need to be switched, moved, renamed or rethought? Can you still afford your home? What’s your optimal insurance and retirement strategy moving forward?


If you are still working and supporting kids, you may need to bump up your own life or disability insurance, says Ken Weingarten, a Lawrenceville, New Jersey, financial adviser. You may also want to take another look at long-term care insurance or make other plans for how you will receive care if you need it down the road, he adds. “My personal experience colors this,” says Weingarten, whose mother died young after several years in a nursing home.


If you and your spouse were already drawing benefits, you will be able to elect the higher benefit going forward. If you yourself haven’t claimed any benefits yet, you have a choice: You can take either your survivor’s benefit based on your spouse’s work history, or the retirement benefit based on your own record. You then can switch to the other benefit, if it ends up being higher, later on.


Are you still in your 50s? Although it’s possible to roll your husband’s 401(k) or IRA money over to your own retirement account, don’t rush to transfer the 401(k), Weingarten warns. As a widow, you’ll be able to withdraw money from your late husband’s 401(k) whenever you need it, regardless of your age, without paying a 10 percent withdrawal penalty. (It will still be taxable as ordinary income.) If, instead, you move the 401(k) to a rollover IRA, you’ll have to pay a 10 percent penalty on any withdrawals from that IRA before you turn 59 ½, as well as the taxes.


If your family income doesn’t fall substantially when you are widowed, you may be bumped into a higher tax bracket, because the income cutoffs for filing singly are much lower than they are for couples filing joint returns. So make the most of your more generous tax treatment in the year of your spouse’s death, when the IRS still lets you file as a married couple, suggests Carolyn McClanahan, a Jacksonville, Florida, financial planner. In that year, take taxable withdrawals from 401(k) or IRAs so that they take full advantage of whatever bracket you’re in, even if you use the money to create a rollover Roth IRA or just to put some extra in your non-IRA savings account.


You may be surprised to learn that you may not be an equal account holder of your credit cards. You may be listed as just an authorized user of a card that is entirely your husband’s account. If that’s the case, the card issuer will eventually learn of your husband’s death and cancel the account. Don’t wait for that, McClanahan says. Let the company know of your husband’s death. “Most issuers will work with the spouse to get them a card,” she says. Better yet is to take preventive measures while your spouse is still with you: Either establish joint credit card accounts (in which both of you are liable for making payments) or become the primary owner of at least one card.


You’ve heard it before, but don’t be in a hurry to move, sell a house (or even a car) or write big checks for your kids in the immediate aftermath of a death, McClanahan warns. You may regret choices made in haste and grief. And you can always settle your finances and your life later on.