Financial Planning Checklist for Widows and Widowers

Moving forward after a loss is understandably very difficult. When you’re ready to start thinking about financial decisions and adjustments, you’ll probably have questions. There are big decisions to be made, and you may be wondering where to begin. We’ve compiled these financial tips for widows and widowers to help guide you as you transition into this new phase of life.

1. Assemble a Team

The first step to regaining your financial footing after the loss of a loved one is to connect with professionals who can guide you through the different phases of the process. The stress of a loss may affect your ability to make major financial decisions. Your financial planner, your Farm Bureau agent, an accountant, an attorney and a banker can provide financial advice for your unique needs, including helping you ensure nothing is overlooked.

2. Reassess Your Financial Needs

Without a doubt, losing a spouse creates big changes — to 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 plan to ensure you stay on track.

3. Don't Rush Career Decisions

With shifting financial and personal responsibilities, you may be deciding whether to leave a career or rush into one. Before you take on a lifestyle change, think about how that decision will affect all facets of your life and wellbeing — beyond your finances. If the stability and structure of your career brings the comfort and familiarity you need during this adjustment, you might find it’s better to hire professionals to help with your new responsibilities in lieu of quitting your job.  

4. Account for the Assets You're Inheriting

If you’re the beneficiary of a life insurance policy, 401(k) or other financial assets, you’ll need to address each asset according to its unique considerations. Here’s what you need to know about three common financial assets.

Life Insurance

If your spouse had a life insurance policy and you’re a beneficiary, 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 receive those benefits as the surviving spouse.

IRA or 401(k)

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

• As the widow or widower, you can elect to roll your deceased spouse’s retirement account— IRA or 401(k) — over to your own retirement account. With this option, all deferred income taxes will continue to be deferred until you make withdrawals from the account.
• You can choose to leave the money with the 401(k) provider.

5. Decide Whether to Receive Survivor Benefits

When you spouse passes away, you 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 the survivor benefit:

• If your spouse waited to take benefits until full retirement age or beyond, the survivor benefit is equal to 100% 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 government benefits for widows and widowers 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.

6. Connect with Charities That Can Help

If you’re in need of financial help after the loss of a spouse, there are charities that can help. Charities that help widows and widowers with financial support, health resources and that create community can provide much-needed support as you navigate life after loss.

How Can We Help?

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