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Financial Guidance for Recent Widows

| February 08, 2022

The death of a spouse not only is devasting, the many decisions, both financial and otherwise, that will need to be addressed and handled can be overwhelming and daunting.  According to the US Census Bureau, as of 2019 there were almost 15 million widows and widowers in the country.  About 77% of these individuals (or 11.4 million) were women and half being under the age of 59.  With an average female life expectancy of 79 years of age, many widows may face decades of managing their finances on their own when they may not have done so previously. A recent study conducted by UBS Financial found that 85% of women manage their everyday expenses but only 23% take the lead when it comes to longer term financial and investment planning. This may leave some widows feeling inadequately prepared to tackle major financial decisions. Below are five suggestions for new widows to considers after the death of their spouse:

  1. Try not to make major financial decisions immediately.  Speed does not necessarily work in your favor when you are in the midst of grief and mourning, and rash decision making may ensue.  Instead, try to focus on financial decisions and activities that require your immediate attention. This may include reviewing your income sources and expenses, gathering estate planning documents and death certificates, making sure your health insurance coverage continues uninterrupted, and taking stock of your assets so you know their current value.  Additionally, filing for death benefits and maintaining proper cash balances for short term needs are priority.
  2. Find a financial advisor to be part of your team. As many as 80% of widows fire their current financial advisor upon the death of spouse. A big reason why is their current advisor often didn’t involve them in conversations and decisions when their spouse was alive. This leaves many women feeling ignored and unimportant. If you don’t have a financial advisor already or don’t feel much connection or chemistry with your current one, don’t be afraid to interview a few. However, be aware of unsavory “financial advisors” who prey on recent widows.  If you talk to an advisor who immediately tries to sell you a product on your first meeting, be cautious. A good financial advisor should take the time to get to know you and develop a holistic view of your financial life.
  3. Along the same lines as #2, seek guidance from objective sources.  Friends and family, although well meaning, can give you advice without understanding your total financial picture or situation. Neutral third parties can look at your entire situation, and then give their recommendation or opinion without emotions interfering.
  4. Don’t make an immediate housing change.  Although it might seem tempting to relocate or move closer to an adult daughter or son to ease your loneliness, we do not recommend you leave your home or community right away.  This decision should be made after reviewing not only the financial details of a housing change, but also the non-financial details like leaving behind certain support networks, friends, medical professionals, or organizations you may be involved with.    
  5. Resist giving money away before you have formulated a long-term financial plan.  Women sometimes are approached by other family members asking for a part of their inheritance now. Resist this request at least in the short term and keep your finances as confidential as you would like. Your financial needs have changed and while making money available to children or heirs is thoughtful, we advise against this until you feel you have an accurate picture of not only your short-term needs, but more importantly have a solid plan in place for maintaining your lifestyle throughout your own retirement years. If gifting is an important goal for you, we recommend you work with a financial advisor who can help determine the feasibility of this goal and work with you to put a formal plan in place.

Taking the time to gain financial knowledge and confidence upon the death of a spouse can seem formidable and unnerving. However, taking small steps and building a solid team to help you can build resilience and courage to come out the other side feeling more confident, financially strong and empowered.

Securities and Advisory Services offered through LPL Financial, member FINRA/SIPC, a Registered Investment Advisor. LPL Financial and Croxall Capital Planning do not provide tax or legal advice.  The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.