Experiencing the death of a spouse is an emotional journey that involves many challenges beyond grief. Loss is a certainty for people, but losing the person you rely upon to navigate everyday life results in anxiety and fear.
Your financial security and future are significant concerns that can feel overwhelming in the face of grief, paperwork, and adjusting to a new reality. For some, losing a spouse represents a severe financial risk. Widowhood is often a financial struggle for the remaining spouse, as an individual’s income typically declines after losing their partner.
Despite the panic you may feel taking on your family’s finances, attorneys and financial planners are willing to help. Practical guidance, emotional support, and accessible resources can enable individuals to regain control over their financial future. Let’s examine how you can achieve financial empowerment after losing a spouse to ensure your journey toward independence.
Understanding the Financial Impact of Losing a Spouse
There are immediate and long-term financial implications to face after the loss of a spouse, mainly if the death was unexpected or tough conversations about end-of-life wishes never happened. However, trying to take them on all at once will only compound your grief with more anxiety, stress, and overwhelm at a time when you have more than enough emotional burdens to bear.
As with any major event, it’s best not to make decisions when experiencing significant stress. Newly bereaved spouses are particularly vulnerable to making money decisions that they may not understand, such as purchasing new financial products, reinvesting life insurance death benefits, making costly investment errors, or being taken advantage of by predatory lenders. However, there are some first steps you can take to begin to make headway as you learn to manage your finances.
Practical Steps for Financial Stability
The loss of a spouse ranks as the most traumatic event in life, next to losing a child. Everything seems out of your control; you are scared and lonely, and that state of mind may lead you to make panicked choices and decisions. Here are the initial practical steps to take after your spouse’s death to build your financial stability.
Evaluate short-term income and expenses
Develop a short-term budget to attend to those financial tasks you must address immediately, such as:
- Paying bills
- Determining your cash flow (cash in minus cash out) and whether it is enough to cover your living expenses
- Paying for hospital, funeral, and burial costs
Make a list of all debts due within the next 30 days and determine whether you have enough cash to cover them. If not, don’t panic, especially if you plan to receive money from an estate settlement or insurance proceeds.
You may access insurance proceeds within a few days or negotiate with the remaining creditors for a payment extension. If you use credit cards to cover these bills now, use the one with the lowest interest rate first and be aware of cash advance fees and hidden charges.
Gather essential records and documents
You will want access to your spouse’s records and documents soon to settle your spouse’s estate or apply for government benefits and insurance proceeds. Locate the following documents and apply for certified copies where necessary:
- Last will and testament
- Certified copies of the death certificate (make 10 to 15 copies)
- Spouse’s identification records
- Marriage certificate
- Birth certificate
- Estate paperwork, such as power of attorney, trusts, funeral prepayment
- Insurance policies
- Property deeds and titles
- Financial account information
Organize these items as efficiently as possible to limit further stress or anxiety you may experience from trying to and having difficulty finding these documents later on in the process.
Contact Social Security
You should contact Social Security to report your spouse’s death. If your partner was receiving benefits, this notification will stop the checks. That can amount to a 50% drop in monthly income for the surviving spouse, even as fixed expenses remain the same. According to the Social Security Administration, if your spouse received Social Security benefits, you are eligible for survivor benefits of up to 100% of your spouse’s check amount, although you must be at least 60 at the time of your spouse’s passing.
Build an emergency fund
Although this step will take longer, it is one you should start working on immediately. Creating and continually adding to an emergency fund will boost your newfound financial confidence and give you control over your future.
An emergency fund is a safety net that provides peace of mind when unexpected expenses arise and safeguards your plans. Aim to save between three and six months’ worth of living expenses for the fund. That should allow you to handle your financial obligations during other difficult periods in life.
Seeking Support and Resources
Expert advice is essential to make smart financial decisions, especially when changing your tax status, settling an estate, or filing an insurance claim for the first time. There is a vast and intricate support system of professionals dedicated to helping people reorient their financial lives after losing their spouse. Reach out to these individuals and organizations to help you navigate this difficult time:
- An attorney: they should be your first call and will help you review the will and begin estate settlement procedures. They can also assist you and your spouse with estate planning before you pass.
- Certified financial planners: they will assist you with financial budgeting, investing, accounting, and taxes
- Mortgage lenders: refinancing your home can make paying a mortgage on one income doable, and a lender can help you determine your home equity and whether there are any obstacles to the refinancing option
- Job coaches: they can assist you if you choose to go back to work or switch careers. Even without a college degree, you can find well-paying jobs to supplement your benefits, such as a mechanic, massage therapist, and community health worker.
- Funeral directors: they are excellent sources of information and can help obtain copies of death certificates and apply for veterans’ and Social Security benefits
- Financial coaches and educators: they often provide free services online and in person to help you achieve financial wellness after your spouse’s death
- Community support: Local banks, financial groups, and community members are often good connections to attorneys and financial planners, as well as local meetings on grief and financial well-being.
It’s hard not to feel alone during your grief, but you aren’t when you have a team of experts and friends to hold you up and keep you moving forward.
If you do decide to move on with another career, it’s absolutely essential to maintain a balance in your life. You could consider a job that dovetails with what you already like to do, such as selling arts and crafts online. Whatever you do, give yourself time to grieve. Attempting to charge into a new career in the early stages of grief may do more harm than good. Set your priorities and speak to a counselor, if necessary, to help with time management and the emotional process you’re going through.
Cultivate Independence and Resilience
Achieving financial independence after losing a spouse is challenging but manageable with knowledge and resiliency. When you take control of your financial future, you are honoring your spouse’s memory while securing your health and well-being.
Economic independence is a gradual process, so give yourself grace and lean on your support system when you need someone to have your back. You can secure your financial future and find peace while going through one of life’s most challenging moments.