Financial Planning Tips for Widows and Widowers header image

Financial Planning Tips for Widows and Widowers

Losing a spouse is hard. After all, you’ve shared a lifetime of memories and experiences with this person. Moving forward after a loss is understandably very difficult, so it’s important that you give yourself time to grieve.

When you’re ready to start thinking about financial decisions and adjustments, you’ll probably have questions. We’ve compiled these financial planning tips geared towards widows and widowers to help guide you as you transition into this new phase of life.

Assemble a Team

You don’t have to navigate this time on your own. To ensure nothing is overlooked, seek advice from professionals, such as a financial planner, a Farm Bureau agent, an accountant, an attorney and a banker. As a widow or widower, getting professional financial help can make a huge difference. 

Analyze Your Current Financial Needs

Without a doubt, losing a spouse creates big changes — to both your daily routine and your financial situation. If you’re shifting from two incomes to one, you may need to adjust your monthly budget. Reconsidering your budget may also include reassessing how much you’re saving for retirement. Consider reevaluating your financial planning to ensure you’re still on the right track.

Think About the Assets You’re Inheriting

Things like life insurance benefits and 401(k)s come with different considerations.

Life Insurance

If your spouse had a life insurance policy and you’re a beneficiary, you’ll need to contact the life insurance company and follow the appropriate steps for claiming the benefit. Generally, the beneficiary will not have to pay taxes on the death benefit.

Pension

If your spouse has a pension through a current or past employer, check to see if you’re entitled to those benefits as the surviving spouse.

IRA or 401(k)

If you’re the sole beneficiary of your spouse’s retirement account, there are several options to consider. They may vary based on your spouse’s age, your age and whether your spouse had been taking required minimum distributions.

  • The surviving spouse can elect to roll the deceased spouse’s retirement account— IRA or 401(k) — over to his or her own retirement account. With this option, all deferred income taxes will continue to be deferred until the surviving spouse makes withdrawals from the account.
  • The surviving spouse can choose to leave the money with the 401(k) provider.

Consider Social Security and Survivor Benefits

When a spouse passes away, the surviving spouse can choose to take his or her own personal benefit or the deceased spouse’s survivor benefit. A survivor benefit is based on your spouse’s earnings. There are several factors that determine it:

  • If your spouse waited to take benefits until full retirement age or beyond, the survivor benefit is equal to 100 percent of the deceased spouse’s benefit.
  • If your spouse took benefits at a reduced rate before full retirement age, the survivor benefit is equal to the same reduced rate.
  • The survivor benefit can start as early as age 60, but there may be a reduction in the amount. The Social Security Administration has information to help you understand what benefit may be available to you.

When choosing between your personal benefit or survivor benefit, you’ll want to consider at what age you’ll claim the benefit and which benefit will yield higher payments. Most widows or widowers receive a higher social security benefit by claiming the survivor benefit instead of their personal benefit.

How Can We Help?

The months after the passing of a spouse are trying. We’re here to help. Connect with your Farm Bureau agent or advisor today.

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