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Preparing for the Financial Shocks of Widowhood

A troubling new survey sparks these three tips for wives and widows


(Editor’s Note: This story is part of a partnership between Next Avenue and Chasing the Dream, a public media initiative on poverty and opportunity.)

After reviewing a new survey of widows from Merrill Lynch and Age Wave, I’m worried about the wives of America, or more specifically the wives who, sadly, will likely one day experience the financial shocks of widowhood.

MaddyDychtwald
Maddy Dychtwald

Women are more than three times as likely as men to lose their spouse. But very few wives seem prepared to be able to manage their finances if their husbands die, according to the Merrill Lynch/Age Wave study, Widowhood and Money: Resiliency, Responsibility and Empowerment. Its survey of more than 3,300 respondents (2,638 widows and 741 married) found that only 14 percent of widows were making financial decisions by themselves before their spouse died.

That low percentage is astonishing to me. And it was for Maddy Dychtwald, co-founder and senior vice president of Age Wave, too.

The Biggest Surprise in a Report on Widows and Money

“That finding is scary, and it was the biggest surprise to me from our report,” she told me when I caught up with her a few weeks ago in Oklahoma City at the Investor Protection Trust’s Forum on Investor Education.

What’s more, the survey noted, 69 percent of widows said “becoming the sole financial decision maker” was the top financial challenge of widows. The survey’s disconcerting results made both Dychtwald and me want to do what we can to help wives step in and manage their money if they become widows, and we have some advice below.

Losing a spouse is not only heartbreaking, it’s wrenching. In the survey, “most widows and widowers — 78 percent — describe the loss of their spouse as the single most difficult and overwhelming life experience,” Dychtwald told me. “And two-thirds say that they had so many things to do, they were not sure where to even start.”

Most Women Manage Money Alone at Some Point

The fact is, as I wrote in my book, Money Confidence: Really Smart Financial Moves for Newly Single Women, nearly all women manage their money solo at some stage of their lives either because they are single, divorced or widowed. Yet 53 percent of widows surveyed by Merrill Lynch and Age Wave said they and their spouse did not have a plan for what would happen if one of them passed away and 76 percent of married retirees said they wouldn’t be financially prepared for retirement if their spouse died.

One reason this is so worrisome: half of widows experience a household income decline of 50 percent or more after the death of a spouse, according to the nonprofit Women’s Institute for a Secure Retirement (WISER).

Another: there’s so much financial and legal paperwork widows must deal with immediately after the death of a spouse. Just a few tasks, according to the widows surveyed: filing for survivor’s Social Security benefits, obtaining a death certificate, filing as beneficiary for a spouse’s retirement accounts and getting permission to access their spouse’s accounts.

Top Financial Challenges of WidowsCredit: Merrill Lynch

3 Suggestions for Wives and Widows

Here are three money suggestions for women, from Dychtwald and me, to make things easier on themselves:

1. While you’re married, learn as much as you can about personal finances in general and your household’s finances in particular. Said Dychtwald: “Not only do women outlive men, they often marry guys who are a few years older. That’s seven extra years of life. It’s not a laughing matter. That’s something women have to think of, plan for, gain financial knowledge about and gain financial confidence about — so they have financial peace of mind.”

You can boost your knowledge by learning about money matters in books and online. For instance, there’s From Here to Financial Happiness: Enrich Your Life in Just 77 Days , a new book by personal finance writer Jonathan Clements; Next Avenue Managing Editor Richard Eisenberg recently interviewed Clements in this Next Avenue post. Check out DailyWorth.com, which was recently acquired by noted personal finance journalist Jean Chatzky. The Investor Protection Institute’s iInvest.org site has excellent free guides explaining stocks, bonds and mutual funds. And the WISER site offers retirement planning tutorials for women. A personal plug: check out my top tips for widows in this short informal YouTube video.

For unbiased guidance, you might consider hiring a fee-only planner with the Certified Financial Planner designation.

2. Make money talk part of your marriage. Many married couples avoid having these discussions because money is a touchy subject. But, Dychtwald said, “We took vows ‘to death do us part,’ but we also took love vows. One way to express our love is through some financial planning.”

Financial worries were cut in half for widows who planned ahead, according the survey. Just 36 percent of widows who were involved in financial planning said they worried they wouldn’t be able to support themselves immediately after the death of their spouse; by contrast, 64 percent of widows who hadn’t planned had that worry.

Most Important Financial Steps for WidowsCredit: Merrill Lynch
3. After the death of a spouse, press the pause button. “The first thing a widow should do is keep her hands off anything that doesn’t require immediate financial decisions,” said Dychtwald. “Your emotions are running so high. If there is someone in your family, a friend who you can take advice from during that time, lean on them a little bit. It’s OK.”

It’s important, she added, to be able to take that moment to experience grief. Gathering yourself, and gaining the necessary emotional fortitude that is required, is essential.

Relying on the financial expertise and clearheadedness of others when you become a widow can be a big benefit to you. “Asking for help of people you trust helps you build that financial confidence. You take charge little by little,” said Dychtwald.

Finally, as Dychtwald told me, “widowhood is a big deal, and we shouldn’t discount it.” But, she added, “by gaining financial knowledge and confidence, you can build resiliency and courage and come out the other side feeling financially empowered.”

This story is part of our partnership with Chasing the Dream: Poverty and Opportunity in America, a public media initiative on poverty and opportunity. Major funding is provided by The JPB Foundation. 

By Kerry Hannon
Kerry Hannon has covered personal finance, retirement and careers for The New York Times, Forbes, Money, U.S. News & World Report and USA Today, among other publications. She is the author of a dozen books including Money Confidence: Really Smart Financial Moves for Newly Single WomenGreat Jobs for Everyone 50+: Finding Work That Keeps You Happy and Healthy...and Pays the Bills, Getting the Job You Want After 50, Love Your Job: The New Rules for Career Happiness and What's Next? Finding Your Passion and Your Dream Job in Your Forties, Fifties and Beyond. Her website is kerryhannon.com. Follow her on Twitter @kerryhannon.

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