Most people do not like to think about dying. Even while dying, most people do not want the end to come. Sometimes, in an effort of trying to forget about “the end”, people will forgo important details related to their death, such as proper financial planning for those left behind. However, to show love to those left behind, we need to financially plan for when we are no longer alive.
According to the article, Economic Crisis Heightens Financial Fallout for Bereaved, “One in five people fall below the official poverty line following the death of their partner.” The article went on to say that women tend to be affected more than men, although men can be affected. What does this say, though? People have a 20% chance of being not just poor after a spouse’s death, but below the official poverty line, especially if you’re a woman.
According to the US Census Bureau, a person (such as a widow or widower) with no children at home under age 65 is in poverty if their income falls below $11,201! Now, I’m not sure about you, but if I only made $11,201 or less per year, I’d be eating lots of Top Ramen! The thresholds are different based on your number of dependents and your age, but you get the idea that the official poverty line is quite, for lack of a better word, poor!
So 1 out of 5 widowed people make less than $11,201 per year following their spouse’s death (assuming they are under 65 living alone). What about if the widowed person had children? Then the official poverty line would states that the mom with two kids would make less than $17,346 per year–that still sounds like lots of Top Ramen, skipped meals, a scary apartment and shopping at Goodwill. But that is what someone making $8.33/hour working full-time can expect to make in a year!
So how can a person avoid having their widowed “better half” in financial ruin? Lessons I have learned have included the following:
o Meet with a financial planner prior to death. Ideally, it would be best to draw up a plan while healthy, but if you are dying, no time is better than the present! This can save your spouse a lot of “grief” after your death.
o Make sure that all of your beneficiary designations are correct.
o Make sure to be adequately insured. Every situation is unique, so it is important to talk with an insurance professional about what is important for you and your family.
o Talk with your spouse about a contingency plan after your death so that there is less “guesswork” for them to do alone.
o Depose of assets while you are still alive and can make the decisions together. If, for example, a house needs to be sold no matter what after your death for your spouse to cover expenses, then work on getting the home ready for selling currently.
o While you can, help your spouse get ready for the workforce if they have been staying at home or help them improve their skills if their salary/retirement income is less than necessary to cover expenses. Help them now with writing a resume, cover letter and/or signing up for college classes/continuing education.
o Stay educated about changes for benefits through the government. Many people do not realize that their spouse may not receive survivor benefits from the Social Security Administration (SSA) while others did not realize that the SSA even paid any benefits other than retirement. Stay savvy about what your spouse may or may not receive.
Do not let your spouse be another statistic when facing your death. Instead, take proactive steps today, whether healthy or sick, to taking care to make sure that your spouse will have enough to live off of when you have died.