It's a fact — women live longer than men. Scientists aren’t certain why exactly, but some believe it could be because of women’s double-X redundant chromosomes, estrogen, or lots of other factors.¹ But the bottom line is that the population of widows is far greater than widowers.

The problem is that too many widows are unexpectedly thrust into this new phase of life. They are often times ill-equipped to tackle the financial hurdles alone. The death of a spouse is something no one wants to think about. However, good financial planning and a realistic outlook can give both you and your spouse peace of mind for when that day comes.

Every woman needs to plan for widowhood as part of their financial future and to make sure their retirement strategy addresses a woman's unique needs. Here are three reasons why:

Reason 1: Women Can Expect to Outlive Men by About 5 Years²

With increased life expectancy, married women face a higher likelihood of becoming widowed, often at a relatively young age. For example, in 2019, the median age of widows was 59. About half of all widows over the age of 65 will outlive their husbands by 15 years.²

Longevity is a double-edged sword. While it means more time to enjoy life, it also means more years of financial responsibility. Women need to ensure they have the resources to maintain their lifestyle and cover any unexpected expenses that may arise. This preparation isn't just about having enough money; it's about securing peace of mind for the future.

Reason 2: The Death of a Spouse Is an Enormous Stressor³

Even more so than a divorce, the death of a spouse is one of life’s most devastating events. The stress, bewilderment, and deep sense of loss can lead to paralysis and indecision in facing the new financial challenges of getting on with life.

The emotional toll of losing a spouse can be compounded by the financial realities. If you're not prepared, the stress of managing finances in a time of grieving can be overwhelming. By planning ahead, you can alleviate some of this burden. It’s important to have a clear understanding of your financial situation and to begin learning in a time of calm instead of in a time of grieving.

Reason 3: The Average Social Security Benefit Is $1,422.69 a Month for Non-Disabled Widows⁴

The poverty rate among elderly widows is as much as three times higher than elderly married women.⁵ Social Security can be a significant source of income, but it often isn't enough on its own. Understanding how your benefits will change when you become widowed is essential. Many widows face a reduction in household income and must adjust their lifestyle accordingly. Do you have other income sources assets such as savings, investments, and pensions to ensure your financial security?

What Can Women Do to Better Prepare for Widowhood?

Step 1: Organize Your Finances

Don’t wait. Do this now, whatever your age. Gather up those insurance policies, retirement plans, mortgage statements, and list of debts for both you and your husband. Write down the account numbers for bank and brokerage accounts. Double-check beneficiary designations to make sure that you are listed. Have a copy of your husband's Social Security statement so that you know what your spousal survivor benefit will be. Also, keep your property deeds, titles, powers of attorney, passports, W2/income tax return (most recent year), and birth/marriage certificates in a safe, fireproof place.

Don’t store anything in a safe deposit box that you may need before final probate. A probate court could seal safe deposit boxes, making vital documents inaccessible before the estate is settled.

Being organized can save a lot of stress and confusion later. Having everything in one place means you won't have to scramble for important documents when you are already going through a challenging time. Consider creating a financial binder or digital folder where you store all of this information. Make sure that someone you trust knows where to find it.

Step 2: Crunch the Numbers, Make a Budget, and Minimize Taxes When Possible

Almost every widow wants to know the answers to these two questions: Will I have enough? How long will my money last? Gathering and reviewing your financial information is the first step in getting these questions answered. It might be a little uncomfortable, but facing this with a clear head is better. The numbers might show your current lifestyle isn't sustainable on one Social Security benefit. It is better to find out now so there are no surprises. You and your spouse can also make adjustments while there is time.

Get a clear picture of your current expenses versus your income. Do you have a surplus that you can put away towards your future to build wealth? Make sure that you account for any expenses that may increase when your husband passes if he is taking care of gardening and handyman chores.

Also, consider the impact of no longer filing Married Filing Jointly. Will your tax burden increase? For example, if you and your spouse are currently filing Married Filing Jointly and have a taxable income in retirement of $80K, your marginal tax bracket as a couple is 12% in 2023. Let's say your taxable income drops to $70K, once your spouse passes. Most widows think that their taxes will decrease since they made less money, but this is not usually accurate. This is often called the widow's penalty. Widows typically earn less and are usually in a higher tax bracket once their spouse passes because they lose the favorable Married Filing Jointly status. In the example above, a Single Filing Status with a $70K taxable income in 2024 places a widow in the 22% marginal tax bracket. In the year your spouse passes, you may file Married Filing Jointly. There may be a few smart tax moves that you can make at this time and perhaps now to minimize your lifetime tax bill. Ask your tax professional and financial advisor to see what strategies might benefit you.

Step 3: Understand Social Security Benefits and Pensions

Knowing how Social Security benefits work for widows is crucial. If you claim at full retirement age, you might be eligible for survivor benefits, which can be up to 100% of your spouse's benefit amount. If you claim at age 60, your survivor benefit will be reduced. If you take care of your child who is younger than age 16 or who has a disability, you may be able to get benefits at any age. Understanding these benefits helps you make informed decisions about when to claim and how to maximize income. Lastly, remember to check on the one-time payment of $225 that you most likely are eligible for. This benefit must be applied for within 2 years of your spouse's date of death. For more detailed information, see Social Security Publication 05-10084 on Survivor Benefits. Finally, if there are any pensions, does the pension income still continue? If so, does the pension benefit stay the same, reduce to zero, reduce to 50%, etc.? How will these possible changes in income impact your lifestyle?

Step 4: Consider Life Insurance

Life insurance can be a critical component of your financial plan. It provides a safety net that can help cover expenses and maintain your lifestyle after your spouse’s death. Evaluate your and your husband's current life insurance policies to ensure they meet your needs. If you don’t have life insurance, or if your coverage is insufficient, consider purchasing additional policies.

Term life insurance can be an affordable option, providing coverage for a specific period, such as 10, 20, or 30 years. Whole life insurance, on the other hand, offers lifelong coverage and comes with additional expenses. Talk to a Fee-Only financial advisor to find the best option for your situation.

Step 5: Plan for Healthcare Needs

Healthcare costs can be a significant burden, especially as you age. Ensure you have adequate health insurance coverage and consider long-term care insurance. This type of insurance can help cover the cost of care if you develop a chronic illness or disability and need assistance with daily activities.

Medicare is available to those over 65, but it doesn’t cover everything. Understanding what is and isn’t covered can help you plan for additional expenses. A Health Savings Account (HSA) can be a valuable tool for saving for medical expenses, offering tax advantages on contributions, growth, and withdrawals for qualified medical expenses.

Step 6: Create an Estate Plan

An estate plan ensures your wishes are carried out after your death and can help avoid legal complications. This includes creating a will, designating beneficiaries for your assets, and setting up powers of attorney for healthcare and financial decisions.

Trusts can also be a useful tool, allowing you to specify how your assets are distributed and providing potential tax benefits. A living trust, for example, can help your family avoid the probate process and ensure a smoother transition of your assets. A qualified estate planning attorney can help you determine which documents are needed and help you draft the documents so that your wishes are carried out.

Step 7: Build a Support Network

Having a support network is crucial for both emotional and practical reasons. Friends, family, and community groups can provide the support you need during difficult times. Connecting with professionals like financial advisors, attorneys, and healthcare providers can also be beneficial.

Consider joining a support group for widows. These groups can provide a sense of community and understanding, offering a space to share experiences and advice. Modern Widows Club and Grief Share are two organizations that offer valuable support and resources.

Step 8: Review and Adjust Your Plan Regularly

Life changes, and so should your financial plan. Regularly review and update your plan to reflect changes in your life, such as a new job, a change in health, or shifts in your financial goals. This ensures that your plan remains relevant and addresses your current concerns.

At least once a year, take the time to go over your financial documents, update your budget, and review your investments. Make sure your beneficiary designations are current and that your estate plan reflects any changes in your circumstances.

Conclusion

Planning for widowhood isn’t about being pessimistic; it’s about being prepared. By taking these steps, you can ensure that you’re financially secure, no matter what the future holds. Remember, you don’t have to do this alone. Let’s work together to make sure you have everything in place so you can face the future with confidence and peace of mind.

**Michelle Vargas, CFP®, is a Fee-Only Fiduciary Financial Advisor serving clients in Fort Worth, Texas, and virtually nationwide. She enjoys helping clients manage their wealth so they will have their important concerns addressed and resolved. She works in a Fiduciary capacity and receives no sales or commission-related compensation.

This content is developed from sources believed to be providing accurate information and is for educational purposes. It may not be used for the purpose of avoiding any federal tax penalties. Please consult your financial, legal, or tax professional for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.

Reason 1: Women Can Expect to Outlive Men by About 5 Years2

Reason 2: The Death of a Spouse Is an Enormous Stressor3

Reason 3: The Average Social Security Benefit Is $1,422.69 a Month for Non-Disabled Widows4