According to a Merrill Lynch and Age Wave study on widowhood, people aren’t really planning for this certainty. USA Today’s recent article, “Before the death of a spouse, here's how to prepare a financial plan for living alone,” reported that 53% of widows say they and their spouse didn’t have a plan for what would happen, if one of them passed away, and 76% of married retirees say they wouldn’t be financially prepared for retirement, if their spouse died. After the death of a spouse, half of all widows experience a household income decline of 50% or more.
Here’s what couples should do to better prepare for the loss of a spouse.
There are about 20 million widows in the U.S., and 1.4 million new widows annually, according to the study. Nevertheless, most married couples don’t like discussing or planning for death. Nonetheless, it’s best to address this difficult subject head-on, because of the potentially dire consequences.
If you need assistance, speak with a qualified estate planning or elder law attorney. A new widow also should put together a comprehensive financial evaluation and plan with an analysis of potential cash flow issues that emerge after the death of a spouse.
An experienced and knowledgeable estate or elder law attorney can conduct a thorough inventory of the available financial resources and help integrate Social Security, Medicare, Medicaid, veteran’s benefits, and other programs to maximize the benefits you will receive. An experienced estate planning attorney can also then determine, if any asset protection/wealth preservation strategies are necessary to qualify for and preserve government benefits. For instance, an income-only trust to make sure an individual qualifies for Medicaid may be needed to qualify for Medicaid.
Ask yourself if you have enough life insurance because it’s important to get the necessary amount of insurance, in case of an unexpected or premature death. Calculate how much to purchase using any number of methods—human life, financial needs, and capital retention.
A widow needs planning, not products. This is where estate planning attorneys and elder law attorneys can maintain the focus on planning and help protect widows financially.
The key to planning properly for the death of a spouse, is to determine exactly what the available financial resources are and figure out the financial needs. The use of reverse mortgages and long-term care insurance are also vital to review to determine if applicable in your estate plan. You should consult with your estate r elder law attorney before engaging in any product sale.
The next step is to plan on the best way to maximize those resources, while getting additional funds through government benefit programs.
Reference: USA Today (September 26, 2018) “Before the death of a spouse, here's how to prepare a financial plan for living alone”