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Married? In a Long-Term Partnership? Beware of this Financial Pitfall

Married? In a Long-Term Partnership? Beware of this Financial Pitfall

September 28, 2020

Did you know that 90% of all women will be solely responsible for their finances at some point in their lives?

A significant contributor to this statistic is the fact that on average, women live five years longer than men (81.1 years as opposed to 76.1 years). 

According to the Women's Institute for a Secure Retirement, "After the death of a spouse, household income generally declines by about 40% due to changes in Social Security benefits, spouse’s retirement income, and earnings. For many women, the road to poverty begins after their spouse dies"1.

These statistics may be a bit scary but there are things you can do to help avoid the pitfalls of widowhood. I think being prepared is the number one way to help protect yourself. It is a tough but necessary conversation that you should have with your partner

Consider this: if your partner were to pass away, do you want to be stressing about how to make ends meet on top of everything else? I'm 99% sure that your answer is no. If your answer's yes, go ahead and have a beer instead of reading the rest of this article. 

The younger and older widow encounter different challenges. If a woman is on the younger side, she may have children that she needs to continue to support on a lower income. She may now need to pay for childcare as the sole parent or pay for education to reenter the workforce. Another scenario is if they took out a significant mortgage on their home. The monthly payment may have been easily affordable with two working partners. After one of those streams of income disappears, that monthly payment can become onerous. If there was a life insurance policy in place on her partner, those funds can give her some breathing room to grieve and figure out her next move. Immediately having to worry about making ends meet is a huge stressor and one that can be avoided. 

The older widow may have been in a partnership for many years and was used to her spouse or partner handling most of the finances. It can be overwhelming to suddenly take on all of the responsibilities such as investment accounts. She may also be retired and living off savings and income such as social security and pension. Several of these sources of income may disappear at the passing of her partner, perhaps leaving her with difficulty to pay the bills. She may even need to rejoin the workforce for additional income. Something to consider is the option of taking the survivor social security benefit, which can be higher than one's basic or spousal benefit. Often, a widow may wish to move to be closer to family or now has to pay to have someone help maintain her current home. 

An obstacle at any age is not being fully aware of your family's financial situation. Having limited or no knowledge of what investment/savings accounts or streams of income exist is disadvantageous. On an even more basic level, knowing what the bills are and how they're paid is essential. If the bills are being paid from an account that may be temporarily frozen following the partner's death, that's a problem. These are all things that you should discuss with your partner, as I mentioned earlier. 

Survivor income needs are part of any comprehensive financial plan. Don't feel like thinking about widowhood? Have your financial advisor think about it for you. Recommendations could include life insurance solutions and a portfolio strategy that will transition to take care of the widow after her partner passes. 

Sticking your head in the sand isn't a financial strategy with a high success rate. 


This is meant for educational purposes only.  It should not be considered investment advice, nor does it constitute a recommendation to take a particular course of action. Please consult with a financial professional regarding your personal situation prior to making any financial related decisions. (09/20)

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