No one can fully prepare for the death of a spouse. It is an emotional life event that also presents the daunting task of rebuilding your life and making necessary decisions to carry on. Financial matters can feel particularly overwhelming for the surviving spouse, especially if the deceased spouse was primarily responsible for household finances.
Below are some financial planning tips for someone who has recently lost a spouse, but the suggestions below are applicable to anyone who has recently experienced a major life event or transition.
Find Your “Trusted Person”
Finding a trusted person to help guide you during this transition is crucial, which is why this decision is at the top of this list. It can be a family member, friend or professional such as a financial advisor, CPA or attorney. Regardless of who you choose, it is imperative that this person is trustworthy and impartial regarding sensitive financial matters. This trusted person can serve as a “sounding board” to help the surviving spouse deal with financial questions and situations.
Stay the Course
Men and women tend to have fundamental differences in their investing styles. Women tend to invest conservatively while men take more risk in their investment decisions. When combined, these two styles help strike a balance in the couple’s portfolio. If the husband is the first spouse to pass away, the aggressive component of the portfolio could go with him. Removing riskier investments can, believe or not, put a widow at a higher risk of outliving her assets.
The other side to this scenario is just as true. Should the conservative part of a portfolio “vanish” with the wife’s death, the husband could also run the risk of outliving his money. There is an inherent risk from being too aggressive in your personal portfolio when approaching retirement. Both scenarios portray the importance of sticking with an investment plan in the face of change and uncertainty.
Wait Before Making Big Decisions
A surviving spouse might find his or herself in a situation where they need to sell off unnecessary assets to accommodate for the loss of the deceased spouse’s income. This often includes selling the extra car or downsizing into a smaller home. These major decisions should not be finalized in the immediate weeks or months following the spouse’s death when the surviving partner is still in the throes of grief and loss. If possible, the surviving spouse should delay any major decisions until later to be sure they have a clear perspective.
Get Your Financial Paperwork in Order
This last and final financial tip is often the toughest, but can be therapeutic and provide a sense of closure. After every major life event, especially after the death of a spouse, it is always recommended to update all financial paperwork including any estate and financial plans. Updating and organizing the family’s paperwork will give the surviving spouse a better picture of his or her overall financial situation. Surviving spouses should not try to accomplish this task alone. Looking back to the first financial tip, it is best to work with a trusted person or advisor when reviewing all pieces of the family’s financial puzzle.