Sadly, the loss of a spouse sometimes leaves loved ones with little knowledge of their financial affairs.
Losing a partner is a deep personal loss for married retirees. On top of the emotional challenges that such an event poses, however, becoming a widow or widower can be even more difficult for those who don’t have an in-depth knowledge of their financial situation.
Indeed, as part of its ongoing research into various life stages, Merrill Lynch and Age Wave surveyed roughly 3,300 individuals, of which 2,638 were widows and 741 were married but had not been widowed. The pool of respondents included widowers, those widowed within the past five years, and long-term widows (15 years or more). All age groups were represented.
Understanding the Numbers
The majority of those polled admitted they were either not financially prepared to go it alone or had not discussed the situation with their spouse. According to the results, 53% told researchers they and their partner hadn’t developed a plan as to what to do if one spouse died. Of married retirees, 76% said they believed they were unprepared to carry on in retirement without their spouse.
Respondents also reported being sometimes overwhelmed by all the tasks they had to complete following the death of their partner — not the least of which was taking care of their finances. A mere 14% of widows said they handled their money on their own prior to widowhood. After their spouse died, though, 86% took charge of their bank accounts and other finances. The path to financial independence, they admitted, was not an easy one.
Swamped by Paperwork
To get their financial house in order, widows must first work through a mountain of legal and business paperwork. Among the responsibilities widows had to complete were obtaining a death certificate (95%), filing for survivor’s Social Security benefits (72%), securing beneficiary status for the spouse’s retirement accounts (52%), and, perhaps most daunting, receiving permission to access their spouse’s accounts.
For that last item, 74% of widows recommended married couples understand beforehand how to take control over their spouse’s banking and other important financial accounts. Even better would be to have the names of both spouses on important papers such as deeds — a move advised by 65% of widows.
Once widowed, more than half experience household income drops of 50% or more. For those who have more extensive assets, the challenge becomes managing various investments.
For example, nearly 70% receive a median Social Security survivor benefit of $15,000. Another 63% are in line for a median payout of $15,000 in life insurance, while 46% are the beneficiary of a median $25,000 from a spouse’s pension. If the spouse had a 401(k), the surviving partner can expect $20,000 in median income.
How Agents Can Help Widows
With 20 million widows currently living in the U.S., and 1.4 million joining their ranks annually, chances are high insurance agents have worked or will work with widows in their practice. Typically, they will be retired as two out of three find themselves without a spouse at or after age 65.
Though it’s a difficult discussion to initiate, you can help your retired clients prepare for life on their own by offering guidance and specialty products. To ensure clients have the income they need to sustain themselves, they can purchase an annuity to provide income during retirement.
In addition, a long-term care insurance policy can pay for medical expenses without requiring dipping into retirement savings. If your married retired couples haven’t bought a standard life insurance policy, either, a final expense contract covers burial and other related costs. The policies are affordable and can still be bought at older ages, too.
Ultimately, it’s important to show yourself as a resource during what will be a trying time. By helping clients prepare now, they’ll be better positioned, and better supported, when it’s time to adjust to life on their own.