This article can be informative for all but is specifically geared towards our female readership. We recognize every family situation is unique, and therefore, the content within may not apply to all.
At the loss of a spouse, particularly one responsible for the family’s cash flow and investments, the emotional turmoil can be significantly magnified by the additional responsibility of financial management. A recent survey found less than half of widowed women felt prepared to manage their finances after the death of their spouse.[1]
Our goal is to prepare you for such an unfortunate event and, in doing so, reduce stress and increase financial empowerment to navigate your financial future more confidently. Below are actions we recommend taking to financially prepare you for the loss of your spouse.
The transition following the loss of a spouse can be financially overwhelming. Yet, statistics suggest that 90% of women will eventually handle their financial affairs solo.[2]
This underlines the necessity for proactive financial planning, even when the thought seems daunting. We recommend joining your spouse in meetings with your financial advisor now and leaning into financial education, preparation, and strategic planning.
The importance of having a financial plan cannot be overstated. A comprehensive financial plan is an all-encompassing snapshot of your current financial status, offering clarity and control. It allows you to map out your future goals confidently, providing a roadmap to guide you towards financial stability. It helps design how much risk is acceptable and the strategies that best align with your financial aspirations.
Despite all these benefits, sadly, only 5% of women had such a plan before they lost their spouse.[3] Yet, you don’t have to go it alone. A wealth advisor who acts as a fiduciary can be your ally in this journey. These financial professionals provide objective advice and guidance, helping you navigate changes in social security status, tax filing, and cash flow needs.
Collaborating with an advisor can not only help provide peace of mind, but studies suggest that investors with a financial plan and who work with advisors accumulate up to 3 times more wealth compared to those who do not.[4]
Understanding financial goals and your current financial standing is vital. Gaining a clear overview of your income, expenses, assets, and liabilities is crucial. Understanding your spending habits, risk tolerance, and financial priorities is invaluable.
Knowing where you stand currently provides the foundation for creating this plan and prioritizing accordingly. Thus, regardless of future uncertainties, you can remain confident and in control of your financial future.
Another crucial action to consider is revising account titles and streamlining financial accounts. This means ensuring all accounts are accurately titled and the process of accessing funds is straightforward and simple. Ensuring you have appropriate insurance coverage is another safeguard; it protects against unforeseen financial hardships that may arise.
Additionally, maintaining an emergency fund can be used as a safety net to cover immediate expenses in the case of sudden loss. An emergency fund is a safe and liquid reserve of money that is easily accessible, such as an interest-bearing savings or brokerage account. The Financial Planning profession suggests a good guideline for funding this account is 3-6 months of your fixed expenses. This account provides a safety net and security should unforeseen cash flow needs arise. You can also refer to this article for more details on an emergency fund.
The financial planning journey is intricate and personal, so it’s important to consider seeking advice from professionals like attorneys and accountants, as they can provide their expertise to navigate this path. As advisors to our clients, we play a key role in coordinating communication between these team members.
(For more information on the process, see the CFP Board’s Guide to the Financial Planning Process.)
Unexpected events like losing your spouse can often leave you feeling unprepared.
Being proactive and preparing for the future can help you navigate these complex scenarios with confidence—and it’s never too late to start.
Our team of financial advisors would love the opportunity to support you through the steps outlined above. Please reach out to learn more.
[1] Thrivent Newsroom, Financial challenges hit harder for widowed women; Thrivent survey finds (Link)
[2] Ackerman, Ruthie. “Clients From Venus”, Wall Street Journal (Link)
[3] Thrivent Newsroom, Financial challenges hit harder for widowed women; Thrivent survey finds (Link)
[4] Annamaria Lusardi and Olivia S. Mitchell, Financial Literacy and Planning: Implications for Retirement Wellbeing (Link)
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