Wealth Management Challenges and Opportunities for Widows & Widowers

Few life transitions are as difficult as losing a spouse. The life changes and critical decisions that new widows & widowers face can be overwhelming given the enormous emotional trauma of losing a spouse. And while the social stigma associated with being a widow & widower has faded from modern American society, recent economic and demographic trends have created additional pressures.

For example, according to David Bach’s excellent book, Smart Women Finish Rich (Broadway Books, 2002), the average age for new widows in the United States is a mere 56 years old. Not only does this mean that the average widow will need to find ways to economically, emotionally, and socially take care of herself for decades to come, but she may find herself in the “sandwich generation,” asked to assist and perhaps provide for both her children and her parents in their old age. On top of that, the during the Great Recession — the worst economic crisis this country has faced since the Great Depression—has understandably left many widows feeling financially insecure.

By definition, if you’re a financially secure widow or widower, you have substantial economic resources at your disposal; consequently, you also have more complex choices and decisions to make. Without careful planning, it’s entirely possible for your money to run out.

Family members and close friends of recent widow or widowers may offer support and advice, especially in the first few months after losing a spouse. It’s best, however, if spouses financially empower each other throughout their marriage, so that there is less urgency and a shorter learning curve once a spouse passes on.

The Three Stages

It’s useful to divide the economic lives of financially secure widows and widowers into three life cycle stages:

The Normal Life Stage, the Active Grief Stage, and the Renewed Life Stage. After reviewing some of the major decisions that should be made at each stage, we’ll describe the substantial benefits that you will likely experience if you find a trusted and competent wealth manager with whom to work.

The particular situation you find yourself in may be substantially different, with unique challenges, opportunities, and complications. Still, an overview like this one, drawn from the experience of many widow & widowers, can help serve as an overall guide and orientation to some of the specific situations and choices you’ll likely be facing.

The Normal Life Stage is where everything begins. Here, your spouse is alive, you may have dependent or grown children (or parents you’re taking care of), and either spouse may still be employed. This is the perfect opportunity to begin two important aspects of long-term comprehensive planning.

The first aspect involves fully educating and bringing yourself into the financial conversation. As already mentioned, in many cases family finances are solely one spouse’s domain. You may have very little idea about how much you are worth as a couple, what your assets are or where they are held. You may also be unaware about how your assets are titled or how they will be transferred at death. Often women are unaware about what types and amounts of risk management programs are in place such as life insurance and long-term care, if any.

The second aspect involves recognizing the value of wealth management and the importance of identifying and working with a trusted wealth manager. Wealth management refers to the proactive, comprehensive, and long-term stewardship of your wealth. This involves looking at the “Big Picture” to make sure that all the financial, legal, and insurance pieces work together to ensure the best long-term outcome.

Ideally, your spouse will agree upon the value of fully bringing you into the financial conversation. It’s also a good idea to begin working with an estate planning attorney and a licensed insurance professional. A good wealth manager will often have existing relationships with these other professionals.

With the assistance of a wealth manager you can take action with respect to many important decisions. A retirement plan focusing on investments, cash flow, and tax considerations can be crafted; a comprehensive estate plan can be formulated with the help of an estate planning attorney; funeral plans can be put into place; and long-term residence, health care, and insurance needs can be addressed.

The Active Grief and Renewed Life Stages

All of this planning and working with professionals may sound daunting—complicated, time consuming, and expensive. However, it’s generally easier and more effective to set these plans into place during the Normal Life Stage, and more difficult to address these concerns during the Active Grief Stage. In fact, the Active Grief Stage requires substantial financial and legal focus precisely when many emotional difficulties and real-world demands arise.

The first priority during the Active Grief Stage, of course, is to make sure that your own

immediate physical and emotional needs, as well as those of other family members and close friends, are handled. Some of us can address basic needs when experiencing deep grief, but some people really do need the kind of caretaking that family members, good friends, and close members of religious communities can best provide.

Decisions about how to handle life insurance proceeds, and choices regarding both retirement plan distributions, social security and pension elections, are often required while most widows & widowers are in the Active Grief Stage.

If you haven’t been working with a financial advisor or wealth manager up to this point, this is a perfect time to bring one in. The right wealth manager will not only be supportive of your emotional situation, but will also help evaluate your estate. This may include how your assets are titled as well as advising on critical and often irrevocable decisions which could have long-term implications.

Eventually, the Renewed Life Stage is reached. Here, you plan for and settle into living well for the long run. All probate and estate related matters are fully resolved, financial equilibrium is reached, and long-term comprehensive plans are updated, created and set into motion. These include decisions regarding retirement and estate plans, residency options, and making appropriate choices regarding insurance coverage, if appropriate. It may take some time, but during the Renewed Life Stage you’ll probably resume many of your previous activities, or perhaps create a new lifestyle appropriate for your changed circumstances.

A Wealth of Advantages

Ideally, a competent and trusted wealth manager will have come into the picture during your Normal Life Stage, and if not then, during your Active Grief Stage. The advice of a wealth manager during the Active Grief Stage can be truly invaluable, both as to real-world practicalities and as to urgent financial decisions that need to be made.