Have you ever thought about what would happen to your finances if you lost your spouse prematurely? Most people avoid this topic, and understandably so. We don’t want to dwell on things that cause us emotional distress, but what we don’t realize is that by avoiding the topic, we could be setting our financial life up for disaster.
The truth is that women currently live longer than men in every country in the world. (1) In the U.S. specifically, women are expected to live until 86.5, and men until 84. (2) What do these statistics mean for your finances? Since 80% of women live longer than their spouses, often for an average of 14 years, you need a plan in place to protect the surviving spouse from a premature death devastating their finances. (3) Here are 5 financial moves you can make now to prepare for the unexpected loss of a spouse.
1. Keep Each Other Informed
Typically, one spouse takes primary control of the finances, meaning only one spouse may be intimately aware of the location and status of investments, property deeds, life insurance benefits, and more. If that spouse dies without sharing this information, the widowed spouse is left in the dark about how many accounts they have, what policies are in place, and how to access all the information they need.
In a time of grief, you don’t need to deal with this kind of headache. This situation can be easily avoided by keeping your spouse informed and involved in the finances. Have frequent check-ins to discuss your financial situation and be sure to outline all pertinent information in a secure place your spouse can easily access. And don’t forget to communicate about where important documents are kept, such as birth and marriage certificates, property deeds, and car titles. This simple step saves time, headache, and heartache down the road.
2. Create An Estate Plan
An Estate Plan isn’t for those on their deathbed or the ultra-wealthy; it’s for everyone. Unfortunately, around 60% of Americans don’t have an Estate Plan or even a simple will (4) and barely half of those over age 55 have taken the time to create a will. (5) Your will and other estate planning documents outline what happens with your property and dictates guardianship of your children. It also names your executor, who will carry out your wishes. You don’t want to leave these decisions to the State, which is what will happen if you don’t have a will or an effective Estate Plan. Make sure your spouse or other family members know how to access your will or other Estate Planning documents when the time comes, and remember to review them regularly to ensure they are up to date.
3. Get Practical
When someone dies, the day-to-day tasks of life don’t just stop. The bills still need to be paid, taxes still need to be filed, and you still need to live within your means. Sit down together and create a system to streamline these tasks, setting up auto payments for everything from the mortgage to car loans to utility bills and HOA dues.
Then create a “what if” budget, examining your current financial needs, income sources, and future benefits, such as Social Security and pension benefits. Play around with different scenarios to make sure you or your spouse will have enough to live on if one of you passes away unexpectedly. If you don’t already have a written budget, begin tracking your expenses and create one. It will be an incredible aid when planning for the future.
4. Update Insurance
Remember, when a retired person loses a spouse, they will be faced with a loss of income (Social Security and/or pension) and will now file taxes as single. Stress-test your income plan for this inevitability, and adjust life insurance accordingly.
When was the last time you reviewed your insurance policies? You most likely purchased insurance to protect those you love, so do your due diligence and verify that the various policies are current and beneficiary information is correct.
In addition to the life insurance payout that your family will receive, have all the details for your other policies in an easy-to-find spot. Your spouse will need to contact the companies to cancel or update the policies. This includes medical, dental, auto, long-term care, and homeowners, to name a few.
5. Establish A Relationship With A Trusted Professional
Having a support system with experience in these areas will make your planning process simpler. Take the time now to build a relationship with an advisor and make sure your spouse and family members are involved so that if the unexpected happens, they have someone they can rely on to help them handle matters. Financial professionals are experienced with these situations and can guide you through the steps that apply to your unique circumstances. They will not only help you take care of pressing problems and concerns but can also help you feel more secure in a time of financial change. A financial advisor can make sure your affairs are in order, update your financial plan, and implement appropriate strategies to help you stay on track financially.
Let’s Get Started
At Mason & Associates, we believe it is worth your time to prepare for an unexpected death before it happens. We work to prepare your finances for any situation and every stage of life. As you start preparing for an unexpected death, we are here to answer any questions you may have. Contact our office by calling us at (323) 254-3072, or simply click here to book your free 30-minute introductory phone consultation today!
About Mason & Associates, Inc.
Mason & Associates, Inc., was founded in 1989, specializing in Life Planning for individuals, families, and small businesses. Life Planning places a person’s core life values at the heart of the advice process and focuses on the human aspects of financial planning.
As a client, your personal story is key to our planning process. That is why we strive to build a close relationship that will encompass every aspect of your life. Together with our team of professionals, we guide you through the process of identifying what is important to you, your goals, your dreams. We then put into place a financial road map to set you on your way toward achieving your objectives.
Our responsibility does not end there. As you encounter bumps in the road, changes in goals, or any other roadblocks, we are there to offer advice and guidance. We are there to celebrate your successes and cope with your challenges. We work alongside your other professionals, such as your attorney and your CPA, to be sure all of your legal and financial needs are aligned.
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(1) http://www.prb.org/DataFinder/Topic/Rankings.aspx?ind=6
(2) https://www.ssa.gov/planners/lifeexpectancy.html
(3) https://www.census.gov/prod/2013pubs/p20-570.pdf
(4) https://www.caring.com/articles/wills-survey-2017/
(5) https://mlaem.fs.ml.com/content/dam/ML/Articles/pdf/ml_LegacyStudy_Final.pdf