Losing a spouse is never easy. After all, you planned a life together and shared a lifetime of memories and experiences. Because moving forward after a loss is understandably very difficult, it’s important that you give yourself time to grieve and process your loss.
When you’re ready to start thinking about financial decisions and what adjustments are needed, you’ll probably have many questions. You may be wondering what you need to know for retirement. We’ve put together information to help guide you through the next steps as you adjust your financial plans.
Assemble a Team
You don’t have to navigate this tough time on your own. To ensure nothing is overlooked, it may be a good idea to seek advice from resources such as a financial planner, a Farm Bureau agent, an accountant, an attorney and a banker.
Analyze Your Current Financial Needs
Without a doubt losing a spouse creates big changes in your daily routine, financial situation and many other ways. If you’re moving from two incomes to one, you may need to make adjustments to your monthly budget to ensure your basic needs are covered. Adjusting your budget may also include reassessing how much you’re saving for your retirement.
Assess Any Assets You’re Inheriting
- Life Insurance: If your spouse had a life insurance policy and you’re a beneficiary on the policy, you’ll need to contact the life insurance company and follow the appropriate steps for claiming the benefit. Generally, the beneficiary will not have to pay taxes on the death benefit. Ensuring your day-to-day expenses are covered is your first priority.
- Pension: If your spouse has a pension through a current or past employer, you’ll want to check to see if you’re entitled to those benefits as the surviving spouse.
- IRA or 401(k): If you’re the sole beneficiary of your spouse’s retirement account, there are several options to consider. Options may vary based on your spouse’s age, your age and whether or not your spouse had been taking required minimum distributions.
- The surviving spouse can elect to roll the deceased spouse’s retirement account (IRA or 401(k)) over to his or her own retirement account. With this option, all of the deferred income taxes will continue to be deferred until the surviving spouse makes withdrawals from the account.
- The surviving spouse can choose to leave the money with the 401(k) provider.
Consider Social Security Benefits
Generally when a spouse passes away, the surviving spouse can choose to take his or her own personal benefit or the deceased spouse’s survivor benefit. The amount of your survivors benefit is based on your spouse’s earnings. There are several factors that determine the benefit amount you are entitled to — if your spouse waited to take benefits until full retirement age or beyond, the survivor benefit is equal to 100 percent of the deceased spouse’s benefit. If your spouse took benefits at reduced rate before full retirement age, the survivor benefit is equal to the same reduced rate. The survivor benefit can start as early as age 60, but there may be a reduction in the benefit amount. The Social Security Administration has put together information to help you understand what benefit may be available to you.
When deciding between taking your personal benefit or the survivors benefit, you’ll want to consider what age you’ll claim the benefit and which benefit will yield higher payments. According to Kiplinger, the Center for Retirement Research at Boston College found most widows received a higher social security benefit by claiming the survivor benefit instead of their personal benefit.
Moving forward after losing a spouse is without a doubt a very difficult transition. It’s important to take steps at your own pace and take care of yourself and your family. Be sure you’ve taken the time you need to grieve before making any major financial decisions. When you decide you’re ready be sure to locate any important documents such as a will/estate plan and a Journal of Wishes and Records that can help you answer some of the tough questions.