How to Prepare Financially for the Death of Your Spouse

How to Prepare Financially for the Death of Your Spouse

Aside from the grief that widows and widowers experience following the death of a spouse, many people wonder how one can financially survive the death of a spouse. If a survivor is not financially prepared for the death of a spouse, the financial ramifications can cripple them for years to come.

“The death of a spouse can have devastating financial consequences for a family,” said Joe Clauson, a Mutual of Omaha spokesperson. “The short-term effects could include paying the mortgage and other monthly bills but may also include the immediate event of paying funeral costs.  Thinking long term, the deceased spouse’s contributions to retirement planning or education may have been a large part of the family’s future.

While no one can predict the death of a spouse, there are steps you can take right now to mitigate the financial impact of unexpected death on your family.

Begin by asking yourself a few simple financial questions, such as, “How much money would you need to pay all of your daily living expenses and protect your livelihood?” Could you afford child care if your spouse died? Would you have to reduce your working hours or travel for work in order to care for the kids? And, if both parties work, will one income be enough to cover retirement savings? Or will your income only cover your basic living expenses?

When deciding how much life insurance to buy, Bloomberg Businessweek advises people to “think like an economist.”

According to Rick Blaser, Director of the Private Wealth Management team at Hartford Life, the greatest risk to your financial comfort is your social status. Taxes, creditors, economic downturns, and divorce are the major financial risks for those considered upper class (annual household income of more than $250,000). Economic downturns, divorce, and long-term care expenses are major financial hazards to avoid for those in the middle and lower classes.

According to Blaser, “Financial problems are normally brought on by personal tragedy, something that can be insured against, such as death. So people should buy insurance to protect their largest financial risks.”

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