According to the Administration on Aging, in 2010 there were four times as many widows as widowers. Over half of all women over 75 live alone, and one third of all women who become widows are under the age of 65. About one third of all women who reach 65 are likely to live to 90. Twenty seven percent of unmarried women, between ages 65 and 69, are poor compared to only 7% for all married women. Women frequently have erratic work experience, due to family obligations, resulting in lower pensions than men. Only about one third of all women will receive a pension in comparison to about two thirds of all men.
These are just a few statistics indicating why it is crucial for women to plan ahead for the uncomfortable, but very real possibility of becoming a widow. Many couples spend years planning for retirement together, but avoid planning for the possibility of living alone. Couples need to develop a plan that addresses issues that must be dealt with upon the death of a spouse, as well as a plan for long term financial security for the surviving spouse.
Start by working with an Estate Planning Attorney, whom you both feel comfortable with, to draft your wills and powers of attorney. Part of this process should include reviewing the beneficiary designations on all of your retirement accounts and insurance policies to be sure they are consistent with your estate planning goals. This is also a good time to discuss end of life preferences with one another.
The next step is to organize your finances and ensure that you both know what you have, where you have it, and how it can be accessed. Take an active role in managing your finances. If you are uncomfortable or don’t understand your finances, do some reading, take some classes or ask your planner to help you better understand your financial situation. If you decide to work with a financial planner, take the time to select someone with whom you have complete trust and confidence – someone you can rely on as a trusted resource, should you become a widow.
Ensure that you have adequate emergency reserves to cover funeral expenses and living expenses for several months while the estate is settled. The loss of a spouse is extremely difficult and you don’t need money worries on top of the tremendous emotional hardship you will be experiencing.
Incorporate the possibility of losing a spouse in your long term financial planning. Run retirement scenarios and develop a plan that meets your goals together and on your own. Review and understand survivor benefits associated with Social Security and Employer Pension Plans. If your projected cash flow falls below your expenses, consider purchasing term life insurance or developing contingency plans to reduce your expenses.