Financial Planning Needs to Include Planning for Widowhood

By Jane Young

Women have greater longevity than men, wives tend to be younger than their husbands and remarriage rates are lower for women than men who have lost a spouse.  Women are three times more likely than men to lose a spouse.   According to the Administration on Aging over half of all women over 75 live alone and one third of all women who become widows are under the age of 65.  

On average, women experience a 40% decline in household income when they lose a spouse.  This is largely due to the loss of Social Security and retirement benefits.  Many women have lower retirement benefits due to breaks in employment to care for children.   Generally, only one third of all women will receive a pension in comparison to two thirds of all men.   Twenty seven percent of unmarried women, between ages 65 and 69 live in poverty compared to only 7% for married women.

These statistics illustrate why it’s crucially important for women to plan for the uncomfortable but very real possibility of becoming a widow.  Many couples are diligent about planning for retirement together but avoid planning for the unpleasant prospect of spending retirement alone.  Couples need to develop a plan to handle issues that must be addressed upon the death of a spouse and as well as a plan to provide for long term security for the surviving spouse.  

Women need to take an active role in managing the household finances.  Organize your finances so you both understand your current financial situation – what you have, where it is held and how to access it.  If you are uncomfortable or don’t understand your finances, educate yourself to learn more about your finances.  Do some reading, take some classes and ask your financial planner to help you better understand your financial situation.  

Incorporate the possibility of losing a spouse in your long-term financial planning.  Run retirement scenarios and develop a plan that supports your goals together and individually.  Review and understand survivor benefits associated with Social Security and Employer Pension Plans.  If your projected cash flow falls short of expenses, consider purchasing term life insurance or develop a contingency plan to increase income and reduce expenses.

Work with a trusted Estate Planning Attorney to make sure your wills, powers of attorney and beneficiary designations reflect your estate planning goals.  This is also a good time to discuss end of life preferences with each other

Make plans to avoid the need to make major financial decisions during the early stages of widowhood when grief makes it difficult to focus and think clearly.   Maintain an adequate emergency reserve to cover funeral expenses and living expenses for several months until the estate is settled and you are ready to address financial concerns.  The loss of a spouse is extremely difficult, and you don’t need money worries on top of the tremendous emotional hardship you will be experiencing.