On average, women in the United States live five years longer than men do. Up to 70 percent of the women who are part of the baby boomer generation are expected to outlive their spouses. In fact, the trend has already begun. In 2006, there were approximately two million baby boomer widows. As the 78-million baby boomers living in the U.S. grow older, that number is expected to climb as high as 20 million. How do you protect the financial health of your surviving spouse?
According to financial planners, many baby boomer women lack experience managing financial assets. In fact, about 40 percent of married women reportedly let their spouse handle all of their retirement planning needs. Unfortunately, many Americans have failed to properly fund their retirement, savings, and investment accounts. Additionally, one survey found nearly 80 percent of women believe they lack the ability to make informed financial planning decisions. In addition to the emotional turmoil experienced by many boomer widows, harsh financial realities often result. Careful advance planning can help everyone who loses a spouse avoid financial ruin.
The first thing spouses of any age can do to protect one another’s financial future is to begin the estate planning process. Do not wait for an illness or unexpected tragedy to begin taking measures to plan for the financial health of loved ones following your death. It is also important to ensure each spouse has access to all banking and other financial accounts. Wherever possible, assets and financial accounts should be titled jointly or in a joint trust to ensure they may be utilized by a surviving spouse immediately. Otherwise, a widow or widower may be required to wait for the probate process before gaining access to the assets. If one spouse handles all of a couple’s financial matters, his or her partner should be made aware of all life insurance policies, account numbers, important contacts, and pins or passwords. By thoroughly documenting all financial accounts, neither spouse will be left in the dark or placed in the position of attempting to make sense of random financial statements following the death of a partner.
Another way to financially protect a surviving spouse occurs when the primary earner in the household waits to collect Social Security. Although baby boomers are eligible to begin collecting Social Security at age 62, the monthly payments will be reduced. Unfortunately, if the primary earner in a household chooses to collect their benefit at age 62, that reduced payment amount also passes on to the surviving spouse following their death. In contrast, individuals who wait until age 70 to collect Social Security will receive a larger monthly payment that may assist a surviving spouse for many years to come.
Perhaps the most important thing a married couple can do to protect one another from financial ruin is to consult with an estate planning attorney, along with a financial planner and an insurance expert. In order to fully protect your loved ones, it is essential to create or update estate planning documents prior to your death. By taking care of this before an issue arises, you and your spouse remain in control. If instead, you choose to rely on the courts to ascertain your intent, it will likely be both costly and time-consuming for your widow or widower and other loved ones. Because your end of life wishes may change, it is a good idea to have our capable estate planning lawyers review your estate plan on a regular basis.
If you would like to discuss your estate plan with an experienced lawyer, request a consultation. Our attorneys are here to help you plan for your surviving spouse’s future. We help clients with probate matters, trusts, wills, health care documents, powers of attorney, and other estate planning tools.