Widower benefits don’t get much attention. Do a Google Search on “Widow Benefits” and you’ll get 4,530,000 hits. (“Widower Benefits” only gets about 700,000 hits…sorry guys.) I bring this up because most couples do no planning and that means the survivor is going to have to sift through between 700,000 and 4,530,000 articles and pieces of information in order to educate themselves about what benefits they are entitled to.
Apart from the “widow benefits” issue of course is the overall concern about financial and emotional survival. When you ask the question, “Do I have enough money to retire,” do you also consider survival without your spouse’s income?
According to an AARP survey of 600 men and women age 40 to 79, women struggle more than men when they considered four life crises: divorce, death of a spouse, long-term job loss and serious illness. Specifically, 46 percent of the widows reported a significant impact on finances after their spouse died. Only 17 percent of widowers said the same. Regardless, some of these folks should consider life insurance even if they are a senior…right?
I feel pretty strongly about this issue for a few reasons. First, I see firsthand what people go through when their spouse unexpectedly passes away.
Second, my parents died when I was in high school. They failed to do any planning before they died and as a result my life and the lives of my siblings were thrown into complete chaos, turmoil and fear. They didn’t have a will or a family trust. It makes me really angry when I see other people go through the same thing when I know they didn’t have to. Maybe it just triggers my own fear from the past. Maybe this is my problem. Whatever…it’s still a huge problem, and if you are married to someone you owe it to them to talk about this now.
You have no idea how painful it is for the survivor unless you see someone go through it…and usually by the time you do, it’s too late to help.
OK. Enough sanctimonious speech.
Let’s move on to the solutions.
I see a series of solutions to this problem and I’m going to outline them for you below:
1. Admit it.
Both of you have to admit the truth. Sooner or later, there is going to be “one less egg to fry.” It’s likely that the woman will survive her husband. Facts are facts. Now how are you going to deal with it?
2. Understand the nature of the problem.
Survivors face two issues: income and assets. Income is by far the primary concern. How is your survivor going to…eh…survive? How much income will s/he need? For how long? What are the potential sources of income? Are expenses going to increase because of lost health insurance (or other) benefits?
3. List possible solutions.
Life insurance, investments, pensions, assets and Social Security spousal benefits are all elements of your personal solution. I’ll admit that I haven’t taken the time to really understand Social Security survivor benefits.
I’ve tried to build a survival plan for my wife without even considering Social Security – but I know I’ve been foolish. She’ll quality for benefits and Social Security will very likely still be there. Why would I subject her to the drudgery of having to figure all that out just when she’ll be least able to deal with the headache? I owe it to my marriage and it’s ultimately her money. Seems selfish on my part…right?
How does she make a claim?
How long does it take before the checks start rolling in?
How much will she get?
I know how much she’ll get but I don’t know the other answers. OK…so I’m going to find out more about Social Security survivor benefits and let you know what I find out. So what are you going to do?
No…scratch that…what are you going to do today?
Are you going to schedule time with your spouse to start laying out your “Widow Benefits Plan”? Are you going to pick up the phone right now to schedule that meeting? Are you going to list all the issues that must be addressed?
How long do you think this entire process is going to take you? When I wrote up my “Widow Benefits Plan” it took me about two hours – and then I only had to think about it once a year when I updated it.
Don’t make me come over there.
This is a huge pet peeve for me. Come on.
Have you created a plan? Have you updated it recently? Have you met with your spouse to go over the plan and to answer all the questions?
Erik says
January 7, 2010 at 9:23 AMGood points, Neal. Part of taking care of one’s spouse is ensuring that if one party dies or is incapacitated, the other spouse can manage to keep the ship floating and navigate the rough waters. Complicating this issue is when one spouse (my wife, for example) does not like to talk about finances, the possibility of early demise and generally isn’t as good with numbers and cents. I’ve had to think of creative ways to broach the subject and train my wife in case the worst should happen to me.
I think the following three topics are essential:
1) Have an updated will. Sure for the most part your estate will transfer to your spouse seamlessly, but if there are any kinks or quirks from past marriages, children, etc. it would be best to have this all spelled out. Review this document annually or anytime your family situation changes (birth/death of child, etc.).
2) Carry adequate life insurance on both spouses, even “non-working”. Experts I’ve read online suggest 8 – 10 times the annual income of the covered member. Term life insurance is cheap if you have no pre-existing health conditions. My wife was stay-at-home with our twins the last three years, but we still bought a policy on her to cover daycare expenses if she were incapacitated or died suddenly.
3) Have a written budget where both spouses have input and know what is going on. So many couples try to divvy out the jobs (I pay the mortgage, she pays the cars and utilities, etc.) or worse just one spouse handles all the finances. This is a disaster waiting to happen when one party unexpectedly falls out of the equation. Both spouses need access to and understanding of the basic financial processes that make the day-to-day possible. For example, if one spouse handles the mortgage, will the other spouse know about things like who carries your homeowner’s insurance, whether or not your bank escrows yearly taxes, etc? Also, which bills are set to autopay? Do you get notice that automatic drafts are on your spouse’s account? Will you know when to debit your checkbook ledger for the house payment? Which checks have to be cut by which date to avoid late fees? You MUST combine your finances or risk having one party miss a lot of important steps you take to handle basic income/expense management. If you must have separate accounts, keep them limited to “mad money” only that doesn’t affect your bills.
These three are basics, and there are a lot more specific areas to address, such as rebalancing cash flow, canceling monthly services, reworking numbers based on one adult instead of two, downsizing living accommodations if necessary, keeping medical coverage in place if the deceased spouse’s job was the provider, etc. Having seen what happened to my in-laws when my wife’s father was diagnosed with early onset Alzheimer’s I know what pain and frustration it causes when one party (my mother-in-law) is not familiar with the basics. It took her awhile but she’s finally gotten most things under control.
Sandy L says
January 6, 2010 at 12:48 PMAbout all we did in planning was maxing out our work life insurance and making sure we have a plan for guardianship of kids. I realize this plan stinks if we change jobs or get laid off. We’d like to have a life insurance plan not tied to working at a particular company.
Susana,
You still need the basics..a will, some money for your funeral, your wishes documented somewhere. Who will be your advocate if you get health problems and aren’t able to speak up for yourself? If you have pets, you need to plan for them too. If you don’t have immediate family or close friends you can appoint a lawyer to speak on your behalf and be the executor of your estate.
Neal says
January 6, 2010 at 4:33 PMRight…I am a big fan of having your own term life insurance. I don’t like having such an important part of the financial picture tied to a company that I have no control over.
Neal@WealthPilgrim says
January 6, 2010 at 12:11 PMJoel,,,,,believe me,,,,I’m not trying to be morbid but terrible things happen. Get it done and then you can forget about it and go on to more fun activities. If you do, I’ll see if I can wrangle you up the Pilgrim Pick of the Pack Award!
Susana says
January 6, 2010 at 9:30 AMHi Neal,
I am a life long single person but it seems that many of your blogs assume that everyone is married and has a family. I also need to do some planning which is more complicated by having no siblings and both of my parents being deceased. I would like you to address concerns of those of us who have no dependents or immediate heirs.
Thanks.
Neal@WealthPilgrim says
January 6, 2010 at 12:10 PMGreat issue……you got it!!!!!!! Thanks for kicking my Pilgrim Bottom on this oversight 🙂 I deserved it Susan.
Neal@WealthPilgrim says
January 6, 2010 at 9:01 AMHey Ken,
Thanks for being honest. Would love to hear about your progress on this….
Evan says
January 6, 2010 at 8:04 AMWhat kills me is when I see a “thought out” plan that has one spouse receiving a life only pension with NO thought that the receiving spouse will die first.
Neal@WealthPilgrim says
January 6, 2010 at 9:01 AMAgreed. I think until you see some catastrophic event that comes out of nowhere, you really don’t think it can happen so you don’t plan.
Mike Piper says
January 6, 2010 at 6:59 AMWas going to comment, but first: Wow, big site redesign!
As to the topic at hand though….
One of the most important things I’ve done, I think, is keep a list of all the usernames/passwords for every financial account we have, as well as every website involved in running my business. I’ve also provided my wife with a list of steps to take to maximize ongoing profit from the business in the event of my death or incapacitation.
Neal@WealthPilgrim says
January 6, 2010 at 9:00 AMMike….sounds like you’ve really put a great deal of thought into your planning. Nice.
What keeps others from doing this?