Losing a spouse is undoubtedly one of life’s most challenging transitions. As you navigate this journey’s emotional and personal aspects, addressing the financial considerations that come with such a significant life change is crucial. 

In our recent series on financial and planning considerations for those who are newly widowed, we have covered what it’s like to work with a financial planner and what you need to know about Social Security and pension benefits as a widow. Today, we’ll answer some of the broader financial questions that widows face – and how you can create a unique strategy supporting you in this next chapter.

Should I Relocate?

Relocating after the loss of a spouse is a personal decision that involves careful consideration of various factors. While some may find comfort in familiar surroundings, others may seek a fresh start in a new location. 

Consider factors such as proximity to family, emotional attachments to the current home, and the overall cost of living in different areas. A financial planner can help you analyze the implications of such a decision on your long-term financial plan and decide if you want to deal with the financial and physical upkeep of your current space both now and in the future.

How Will Any Transfer of Assets or Property Ownership Be Taxed?

Navigating the estate transfer and organization process can be a complex financial matter, depending on how your partner’s estate plan was set up. However, luckily, most spouses have a scenario where one of two things are true:

1. They share joint finances, so their names are on critical items – checking, savings, investment accounts, and the mortgage.
2. They are exempt from “traditional” estate taxes because they are the surviving spouse, and most assets are passed to them tax-free. 

If you are running into a scenario where assets enter probate, or if you’re unclear on the tax implications of your asset transfer, it’s worth speaking to either an estate planning attorney and/or a financial advisor to help ensure you’re receiving the assets that will support you in your next chapter – and minimize your tax burden. 

How Should I Invest for Retirement Now That I’m Widowed?

Building a sustainable investing and retirement plan is essential for your personal financial security. Still, it can feel like the last thing on your “to-do” list when working through other financial considerations as a new widow. An excellent first step is to assess your current financial situation, including assets, liabilities, and income sources. 

From there, you can develop an investment strategy that aligns with your risk tolerance and financial goals – knowing those may change over time as you discover what this new season of life holds for you. Working with an advisor can help you answer some of these questions and adjust your portfolio as your goals change with time.

Should I Update My Own Estate Plan?

Many new widows immediately think of their own estate plan, and it’s only natural. You’ve just been through a life-changing event, and it makes sense that you’d want to protect your loved ones in case they have to experience something similar when you pass away. Indeed, the loss of a spouse often necessitates a review and update of your estate plan. 

This includes updating beneficiaries, reevaluating the distribution of assets, and ensuring that your estate planning documents reflect your current wishes. Engaging with an estate planning professional can help you navigate these important legal considerations.

How Do I Adjust My Spending, Or Do I Need To?

Whether you’re still in the workforce, are retired, or stay at home full time to assist with family care needs, a good rule of thumb is to take a full 6-12 months living precisely as you were – no changes necessary. You are dealing with so many emotions and ironing out estate planning items during this time. There’s no reason to make large lifestyle changes to compound your stress. 

A financial advisor can help you coordinate cash flow from your existing assets during this window and make a strategic next-step game plan once you see what you have available and what some of your goals look like going forward. This might look like:

• Investing for a future retirement
• Creating a draw-down plan if you’re already retired
• Determining whether you want to relocate, downsize, or travel more frequently
• Figuring out what expenses stay consistent in widowhood versus what expenses will change or go away after your spouse passed

While the emotional toll of losing a spouse is immeasurable, addressing the associated financial considerations is a crucial step toward building a stable and secure future. By carefully navigating issues such as relocation, tax implications, sustainable investing, and estate planning, you can create a financial plan that supports you through this challenging transition.

Remember, you do not have to navigate this journey alone. Seeking the assistance of a fee-only financial planning firm, especially one that specializes in working with widows and retirees, can provide the expertise and support needed to make informed financial decisions during this critical time.