Feast or Famine: Finances for Surviving Spouses

Feast or Famine: Finances for
Surviving Spouses
Faced with the loss of a spouse’s income or large
payments from insurance or retirement plans, surviving
spouses may need help avoiding the extremes of lavish
spending or fearful frugality.

The abrupt changes in the financial picture can be among the most stressful issues for widows and
widowers. For younger spouses, especially those with children, the sudden and long-term loss of income
can be frightening. Others may feel a false sense of confidence from lump-sum payments of insurance or
retirement plans and overspend. In fact, among widows, 25 percent go through their husband’s death
benefit in two months, according to the Illinois Department of Financial & Professional Regulation.

Having a thorough understanding of the household assets and liabilities before
the death of a spouse prepares many survivors for going it alone – even if they
relied on their spouse to do the actual bill paying and investing. Those who don’t
have that knowledge beforehand face the additional stress and confusion of
figuring it out during crisis or, worse yet, getting unpleasant surprises like large
credit card debt of which they had been unaware.

The hindsight of knowing you should have paid closer attention provides little
comfort. Help may be at hand, however, if you and your spouse had well
established relationships with an attorney, accountant, financial advisor or
insurance professional. If you can, meet with them together to begin building
the picture of your financial situation. Bring to the meeting any documents you
can, including wills, insurance policies and bank or investment statements. If
your team is missing a piece, ask the advisors you have used to recommend a
professional in that area, or get referrals from friends and family.

A word of warning: scam artists may come out of the woodwork soon after your
spouse’s death. Some may claim to have had a relationship or account with your
spouse. Ask for proof in the form of account statements and identifying
information – but don’t provide any yourself. For example, a bank or investment
company will have your spouse’s Social Security information. Do not give that
information yourself if asked to verify. Have the caller give it to you. If accurate,
confirm it. If not, do not offer to correct the information until you have received
other verifying information like an account statement.

After you’ve met with your team – and it may take more than one meeting – you
should have a clearer picture of where you stand for the immediate future and
basic strategies for what to do with lump-sum payments. Your advisors will
probably counsel against any immediate, irrevocable decisions like selling your
home. Your financial advisor can help you with investing insurance or retirement
fund proceeds as appropriate for your situation, and your accountant can provide
strategies for minimizing the chunk Uncle Sam will take. Your attorney will guide
you through any probate and estate issues. And your insurance advisor can
make sure you get any lump-sum or periodic payments to which you’re entitled. Most of these
professionals can also help you with Social Security claims or benefits.

If you find the number and complexity of financial decisions overwhelming, even with your team of
advisors to help, consider asking a friend or family member to accompany you to these meetings. If you
are unclear about a recommendation or process, ask questions and do not proceed until you are
comfortable with the answers. Your advisors should provide information and guidance, but the decisions
ultimately are yours to make.

Robert Valentine, Ca. Insurance License# 0C23496, is a Registered Investment Advisor Representative with Financial and Retirement Management, a Registered Investment Advisor and a
registered representative with Securities America, Inc., a Registered Broker Dealer. Securities offered through Securities America, Inc., Member NASD/SIPC. Financial and Retirement
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