Widows have unique challenges and opportunities as they move towards and through retirement. Retirement is a difficult transition to navigate under the best of circumstances. When you add the emotional and financial pressure that widows face along with normal questions about creating cash flow during this next chapter, it can feel overwhelming, if not impossible.
Whether you have become a widow unexpectedly before retirement or you have been widowed during retirement, careful financial planning during this phase of life can help you to find steady financial footing now while setting yourself up for future success. Today we will cover a few first-steps to consider while evaluating your finances after loss, including how we can help.
Assessing Your Financial Landscape
If you have recently lost your spouse or partner, taking stock of your current financial situation can help you to get a handle on what your short and long-term “to-do list” might look like. During this “getting organized” stage, consider the following:
- Evaluating existing assets. Sometimes the biggest “question mark” when navigating the financial aftermath of a loss is knowing what assets you have access to and where they are. Of course, you may have had primarily joint accounts. If this is the case, your access to assets may remain unchanged. However, it’s also important to look for the following:
- Life insurance policies
- Workplace investment accounts (401k, etc.)
- Other investment accounts (Roth IRA, brokerage accounts, etc.) that may not be in your name
- Pension benefits
- Business and partnership interests
- Reviewing sources of income. Depending on when you lose your spouse, you may still be in the workplace, generating income on your own or pulling income or cash flow primarily from joint retirement accounts. Alternatively, you may be losing income that your spouse was bringing in. Other income sources include Social Security and/or pension benefits or income from a rental property (if applicable).
- Factoring in additional expenses (or expenses that may go away). You may have changing or increased expenses in some cases after losing a spouse or partner. For example, you may have increased:
- Child care costs
- Health care premiums
- Changes to your mortgage and utility bills if you choose to relocate closer to family or other community
However, you may also experience a decrease in some expenses. For example, if your spouse or partner had a particularly long commute or had notable expenses attached to their job (travel, clothing, networking events, or meals), you may find that your expenses decrease. Look at your average expenses in this new season and jot down any notable
changes you foresee.
- Identifying any potential gaps. There may be a gap in your cash flow and expenses after losing a spouse or partner. It is important not to panic about these gaps yet. Working with a trusted advisor can help you to determine other ways to access additional cash flow through any assets or life insurance proceeds, and they can walk you through various lifestyle changes that would positively impact your financial life.
Lifestyle Adjustments: When Should You Make Changes?
Making dramatic lifestyle changes immediately after losing your spouse may be tempting for a variety of reasons, but this may not be in your best interest. Instead, taking the time to identify your financial and legal “team” and helping to get them all up to speed on your unique situation is a perfect first step.
A financial advisor, tax expert, and estate planning attorney can help you to:
- Create a post-retirement budget
- Determine the best way to organize your portfolio, including any insurance payouts you receive.
- Organize a plan for pension and Social Security benefits.
- Assess your current insurance coverage to ensure you are adequately insulated from future risk.
- Create a unique lifestyle plan – including where and how you live – that suits this new chapter of your life, no matter how unexpected or unwanted it may be.
Remember: you deserve a team who is here to support you and to help you answer the question:
Am I going to be okay?
Rushing to make big adjustments to your money or your life in this season may cause unnecessary stress, and making decisions that align with your values while you are grieving may be challenging. An advisor can help you define the type of lifestyle you want both now and in the future and help you to prioritize the people, places, and causes you care most about when developing your own financial and estate plan.
When we partner with clients who have recently experienced a loss, we aim to help clear the storm clouds. Our team helps to coordinate your financial life by grouping up with necessary professionals – estate planning attorneys, tax professionals, etc. – to build a comprehensive plan that helps to protect you financially now and in the future. Together, we will help you leverage your wealth as a tool to live a fulfilling life and prioritizes doing more of what you love with the people you love.