Older Couples Need to Take These Financial Steps to Survive the Death of a Spouse


With the COVID-19 crisis steaming along, U.S. retirees – or near-retirees - are being forced to have an awkward, but necessary, conversation – what if the primary breadwinner passes from the coronavirus?

In that unfortunate event, what would happen to the surviving spouse? (Usually, but not certainly not always, the wife.)

The time for that talk is sooner rather than later, as the death from a spouse in retirement is not uncommon, and a plan needs to be put in place to protect the surviving spouse.

We put the question to Cory Carlton, who runs an insurance and investment firm called Both Hands Investment Group in Brentwood, Tenn.

In Carlton's words, here are the steps that elderly couples need to do right now to plan for the passing of a spouse:

Meet with their advisor annually, together. Often times a wife just lets her husband make all the decisions and is not aware of where their money is, how it's being used, or what kind of protection is in place.

“Couples need to have an analysis of their current financial situation as well as their future retirement to see where any shortfalls may be,” Carlton says. “Often when going through this process, we find people don't have an income plan and will likely run out of money during their lifetime. Consequently, they need an income plan.”

Discuss long-term care needs. Older couples need to understand their exposure to long term healthcare risk and how quickly that can wipe out their savings and the loss of income at death.

“Many people think that when people retire, their income-earning years are behind them,” Carlton says. “That is not true. During retirement, people are drawing Social Security or even a pension that can be significantly reduced due to death.”

“Couples need to understand how their Social Security and pensions can be best used in their income planning process,” he adds. “In addition to an income plan, they need to have the correct budget. Income planning is useless unless a correct budget is in place for retirement.”

Questions to be asking advisors. Carlton advises asking these questions to the family financial advisor when discussing severe health care scenarios before a spouse gets ill and/or passes away.

--- How much risk are we currently exposed to with our retirement money?

--- What is the best way to protect our retirement income from market loss?

--- Are we planning to use tax-free money in retirement?

--- How do we best protect ourselves from a long term care event?

--- How do we maximize our Social Security?

--- What assets do we start taking an income from first?

Figure out your pension payment options. Often times husbands will select a lump sum payout and 50%, meaning after the husband dies the wife receives 50% of the amount.

“It’s better for them to take a lump sum payout option and invest that money themselves and they could receive more income and pass more money to their children,” Carlton says. “We do this a lot in our practice.”

Couples also need to make sure they select the appropriate Medicare plan for them that covers most of their needs. “This can significantly help their retirement income,” Carlton says.


When the breadwinner dies. For current widows or widowers left behind, they’ll need to understand what benefits they are entitled to from their late spouse. “That includes Social Security, pensions, business ownerships, and even veteran benefits,” Carlton says.

Questions to ask advisors once they become a widow. Once a spouse passes, Carlton advises getting answers to the following questions from their family financial planner:

--- What does the current retirement income plan look like now?

--- Have all of the possible expenses that existed with both spouses alive been eliminated?

--- Have all insurance benefits been received?

--- Have all business ownership interests been settled?

--- If they have not already started taking Social Security, when should they do that?

--- What is the proper asset allocation for their retirement money?

--- If there was life insurance on the deceased spouse, what is the right place for that money?

--- Have all debts been paid for the deceased?

Advisors should also be actively meeting with their clients, especially widows that often let their spouses handle all of the finances.

"Financial advisors need to make sure they are taking care of a widow (or widower) like they would take care of their parents and go above and beyond to make sure they are receiving all the benefits they need,” Carlton says. “In addition, the advisor would be wise to begin including the children in the planning process as the children will most likely want to become more involved.”