Education Center » Widowhood the loss couples rarely plan for and should

Widowhood the loss couples rarely plan for and should

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No one is ever ready, emotionally, for the death of a spouse. But you can prepare financially for the decision-making and reduced income you may someday face.

One perfect fall morning in 2012, Erin was waiting for her husband to return from dropping off their twins at preschool. He never came home—her 42-year-old husband had suffered a massive heart attack in the parking lot of the preschool, and by the time Erin got to the hospital, he had passed away. At the age of 41, Erin found herself a widow with four children, ages 7, 6 and the 4-year-old twins.

Losing her husband at such a young age places Erin in the minority—only 6% of the 1.4 million people who lose their spouses every year are under 441—but the shock and grief she felt are universal emotions that all widows and widowers experience. On top of her grief, Erin very soon found herself dealing with such issues as filing for life insurance and her husband’s Social Security benefits, removing her husband’s name from their joint accounts, and worrying about how she would plan for her children’s financial future—alone. Recalls Erin, “Beyond meeting our day-to-day needs, I was most worried that our children wouldn’t have the life that my husband and I had planned for them.”

Widowhood by the numbers. 20 million: The number of widows/widowers in the U.S. today. 1.4 million join their ranks every year. Source: U.S. Census Bureau 2015 Report.

While older widows and widowers may not be burdened with similar concerns about their children’s financial future, they often find themselves dealing with another serious consideration: Will they be able to afford the care they might one day need? This can be particularly worrying for those who’ve gone through a prolonged and expensive period of caregiving for their lost loved one—a situation many widows find themselves in.

To better understand this profoundly difficult—but for most couples inevitable—life event, Merrill Lynch partnered with Age Wave, a thought leader in the study of aging, to conduct research on widowhood and how this loss can affect the surviving spouse’s life and finances. Among the key findings: Men and women who prepare for losing a spouse fare much better in terms of stress and grieving, but a full 53% of current widows and widowers say they had no plan in place for what to do if one of them died.1

Helping you plan for the inevitable and manage your finances when you lose a spouse:

Plan Ahead to Help Your Spouse Manage Loss

A Practical Guide to Moving Forward Alone

A widow’s financial journey

The financial burdens that come with the loss of a partner are immense and immediate. Erin’s position as assistant headmaster for Institutional Advancement of a private boarding school gave her an advantage that few widows have. “I was fortunate that as part of my compensation the boarding school offered housing,” Erin says. According to the Merrill Lynch/Age Wave research, 60% of men and women who lose their spouses are immediately burdened by financial expenses, including housing costs such as mortgages or rent. The fact that 50% of those who lose a spouse also face a 50% reduction in income only compounds the problem.2

In addition to the financial demands, critical paperwork and decision-making begin their steady creep right away. “Most widows and widowers—78%—describe the loss of their spouse as the single most difficult and overwhelming life experience,” says Maddy Dychtwald, co-founder of Age Wave. “And two-thirds say that they had so many things to do, they were not sure where to even start.” That’s when talking to trusted friends and family and coming up with a financial strategy can be invaluable.

“Most widows and widowers—78%—describe the loss of their spouse as the single most difficult and overwhelming life experience.”

–Maddy Dychtwald, co-founder of Age Wave

For instance, Erin realized that decisions she made about managing the benefit from her husband’s life insurance policy could affect her children’s eligibility for future financial educational aid—a major need for her with four young children.

“Only 14% of widows and widowers say they were making financial decisions by themselves before their spouse died,” Dychtwald says. “But once they are widowed, the overwhelming majority—86%—report having to do so.”3 This is even more daunting when you have dependents at home. “Research suggests that any financial decision that isn’t time-sensitive should be put off until you’re feeling less emotionally vulnerable,” adds Dychtwald.

“The most difficult thing is the constant worry,” notes Erin. “That started early on, and it continues nearly six years later.” Over time, Erin has worked through issues involving her return to full-time work and saving for retirement. “I looked at all sorts of expenses and what decisions would need to be made in order to achieve the goals I had for the kids. What’s realistic; what isn’t. What would need to take place to achieve my family’s goals.”

Erin recalls that the day-to-day financial pressures were so great that she thought she might cut back on what she was setting aside for retirement. But she soon realized that retirement needed to be one of her top priorities and made her long-term financial health a focus by keeping up with her retirement contributions.

Finding the courage—and financial confidence—to go on alone

Amid all the pain and difficulty that losing a spouse brings, there is also healing. The Merrill Lynch/Age Wave research found that 77% of the widows and widowers they interviewed said they discovered courage they never knew they had.

“Seventy-two percent of widows and widowers say they now consider themselves more financially savvy than other people their age, and that is empowering.”

–Lisa Margeson, head of retirement client experience and communications, Bank of America Merrill Lynch

“They’re forced to jump into complex financial matters from the start of their journey and adjust to making financial decisions alone,” says Lisa Margeson, head of retirement client experience and communications at Bank of America Merrill Lynch. “In fact, 72% say they now consider themselves more financially savvy than other people their age, and that is empowering,” she says.

“My husband always used to say that what you need will come to you when you need it,” Erin says. Gaining financial confidence can help sustain you through a difficult time. Like many widows, Erin found the strength and confidence to take control of her financial situation as the sole provider of her children. Through careful planning, she’s managed to keep alive the vision she and her husband both had for their future—without jeopardizing her own.

Learn more and take action

  • Creating a personalized estate plan takes careful preparation. This family life organizer can help you document and organize your financial information.
  • Becoming a caregiver may be one of the most important roles of your life. Ask yourself these five questions to help you prepare for the financial challenges you may face.
  • Updating your beneficiary designations can help to prevent unexpected woes. These examples shed some light on why it’s important to keep your beneficiaries in the loop about big life changes.
 
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1 Source: Merrill Lynch/Age Wave Widowhood Research, 2018.

2 Source: WISER, “Survey of Recent Widows,” 2013.

3 Source: The American College State Farm Center, “Survey of Widows and Widowers Topline Report,” July 2016.

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