The loss of a spouse comes in many forms, but several of the challenges are the same. Whether your spouse has passed away, or you have become their caregiver, or you are going through a divorce, you will be facing many of the same financial concerns.
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Here are the three main steps we take to help people navigate the process of taking sole control of their finances.
1. Figure Out What Needs Immediate Attention and What Can Wait
It’s been well-established that women outlive men. Whether you’re a woman or a man, being the surviving spouse can be incredibly overwhelming during one of the most difficult times of your life.
A lot of advisors say to avoid making any big decisions right away after losing your spouse. The reasoning behind this is that any choices you make at such a difficult time will be guided more by emotion than what is best for you in the long run.
I agree that many decisions should be delayed—but there are some that just can’t wait.
When I work with clients who have recently lost their spouse, I always sit down first thing and help them get up to speed on their situation. In order to know what needs your attention right away, we need to get a complete picture.
Ideally, you will have had the chance to walk through your finances with your spouse before they passed, but that is rarely the case. Often, the surviving spouse has gaps of knowledge regarding their financial situation that need to be clarified.
It may feel strange to have someone outside your family telling you about your situation, but that’s why you hire an advisor. We act as a kind of financial detective at this point, pulling together all the details so we can better understand where you are.
We’ll clarify questions like:
- Do you understand all of your statements, assets, etc.?
- Where do you want to be a few months from now?
- Which obstacles are currently present?
As we’re figuring out your situation, we’ll determine what needs immediate action and what can wait.
Immediate items may include:
- Making sure all legal documents are up to date
- Determining where your income is coming from
- Understanding all of your statements
The majority of other decisions can wait, including:
- Where to live
- Asset allocations and other changes to your portfolio
- Whether to sell larger items such as your spouse’s car
- Tax status changes
After the loss of spouse, financial planning can become fraught with potential obstacles, so the next step is to get a handle on all red flags.
2. Identify Obstacles and Possible Solutions
About 50% of widows find that they lose at least 50% of household income after their spouse passes. Nearly 40% struggle to figure out what they are entitled to from Social Security and how to initiate benefits on behalf of their deceased spouse. More than 1 in 4 find they can no longer afford to live in their current house.
These are just a few of the issues that can suddenly arise after the loss of a spouse. One thing to keep in mind is that these obstacles are just that: obstacles. They can be overcome. The important thing is to just move forward.
If you feel lost, call a financial advisor to help you make sense of everything. Many people think if they hire an advisor, they have to commit to a long-term relationship, but we can also step in as a stopgap to help you get through the weeds until you’re out on the other side.
In order to find your path forward, it’s important that you first understand all of the challenges you’re facing, so make sure you’re thorough when it comes to identifying red flags here.
3. Determine a Plan of Action
Your plan of action isn’t just a to-do list that will allow you to check off a bunch of practical tasks that need your attention. It is your path to freedom from the anxiety of the unknown and to ensure you stay on the right path financially.
Now that you understand your situation and have clearly labeled all obstacles, you can start building your plan of action.
Take the immediate action items and put them first. Then prioritize items that can wait and figure out when you can attend to them. If you can, consider waiting a full year before making any decisions on these items.
One exercise I like going through with clients in this situation is called “What if?” It provides a framework for weighing your options and helps break down bigger decisions so they’re not so overwhelming.
However you decide to move forward, you don’t have to do it alone. We have helped countless clients find their way through this painful time and come out on the other side with confidence and hope for the future. Click here to schedule a complimentary consultation with me today,
