One of the fastest growing groups of people in poverty is widows over the age of 65. That is a very scary statistic. Most widows confront financial illiteracy at the same time they have to deal with the emotional upheaval of one of the most stressful human experiences. Truly a double whammy.
Our culture does very little to derail this disaster since the women who are now widowed are the same ones who left everything up to their husbands. Becoming financially literate and taking an active role in their family’s finances was not considered a wife’s role. Given the high rate of divorce and the subsequent higher rates of second and later marriages, this norm must be abandoned and fast. (For related reading, see: What Happens to Retirement Accounts if a Spouse Dies?)
In my experience with women who were never enlightened to their family’s finances and those who relied solely on their husbands’ financial acumen or his advisors, they had several comments to make on the subject. The comments most often came under the things they wished they knew before they became widows.They are:
1. How Much Life Insurance Did My Husband Have and Where Are the Policies?
Her husband was an employee who had counted on the group policies the business had on his life. And when he retired, they soon discovered the life insurance they counted on was gone. It left once his retirement began. And the policies they bought while they were a young family also expired at age 65 and her insurance also went away. But she did not know that.
Her friend’s husband owned a business and he used the insurance policies to protect the borrowings he did while he owned the business. But once the debt of the business was paid off, the insurance also terminated. And the new owners of the business no longer needed to keep his life insurance or to pay its high premiums.
The large insurance policies they bought while their children were at home or still dependent also ended after a certain number of years (10 or 20) when the college education commitments were over.
She wished she had the insurance policies somewhere in a box and if his advisor had included her in the conversation about it, she would have known that she was not going to receive any life insurance benefits. (For more, see: How Women in Transition Should Mind Their Finances.)
2. What Is the Balance (If Any) of the Mortgage on Home?
She wanted to believe the mortgage was paid off long ago but without an updated bank statement or even which bank it would be owed to, she knew nothing about a monthly mortgage payment or worse yet, money being put aside to pay the property taxes. What a huge bill that was. If she knew about this, she might have been able to put something aside to pay it.
And if there was a remaining mortgage balance, what should she do about it? Should she pay it off or keep paying on it monthly? Did she have a choice?
3. Where Should She Live?
She wished they had discussed this before he passed. She would love to move to the townhome they bought in Hilton Head, but what should she do with the big house they had in New Jersey? She had so many friends and colleagues in New Jersey and her life had been built around that social circle they had so intentionally cultivated. She loved their home in Hilton Head, but she knew very few people. That was supposed to be a place they would move to when he sold his business.Her children wanted her to move closer to them, each of the four of them. How should she handle this one?
4. Who Are Our Advisors?
Golfing buddies and county club friends were fine to get to know on a first-name basis but who are the ones she should trust? Her husband had introduced her to many lawyers, CPAs and investment guys but she didn’t really feel comfortable going to any of them for advice. She felt very intimidated by their whole presence - big conference tables, dark foreboding rooms, speaking in languages she did not understand. Maybe it was time to find someone she liked and trusted? She knew some of the bank names on the mailings but mostly she just put them in a pile for her husband to review.
5. Where Can She Find Their Paperwork?
She knew her husband did most of the financial stuff online and now she realized she had no idea what his user names and passwords were. She thought she might be able to get this info if she went to one of the bank sites he had as favorites, but most of these investment firms were nowhere near her home. Many of them were in large cities and with names she did not recognize. Maybe if she presented them with his death certificate that would be enough? (For related reading, see: How do Social Security Benefits for Widows or Widowers Work?)
She also knew he had a safe deposit box at home but again, no idea what the combination is to get into it. Maybe one of her sons might know?
How could she get some money if she needs some? Her name is on one of the bank accounts which she has used for her own personal needs including food shopping and doctor’s office visits. But that was a debit card and she had no idea how much was in the account.
He talked about a will but which law firm did the last one after their son’s marriage ended in divorce? She remembered signing the new will but doesn’t remember where a copy is.
6. How Much Can She Get in Social Security Benefits As a Widow?
She was already receiving Social Security benefits as his wife, but now that he is gone, is his Social Security check going as well? How will she survive without that check? Can she get a larger check if she reapplies under his benefits? This will make a big difference in her income either way, but she did not understand that she would lose his monthly check when he died. And where does she go to talk to someone about this? The funeral director told her he would do the paperwork to stop this, but will she have to pay back the check she got last week?
7. What Investments Do We Have?
She knew they had some investments with several of his friends who were in the business, but she does not know who they are or where to find them. She thinks there were business cards in the top shelf of his desk in the study. Maybe if she can find those cards, she might be able to get a hold of someone who can help her.
She remembered he was talking about the investments he put in some kind of trust which would help her if she died before him, but she knew nothing about that stuff. And it would be very helpful to her now if she knew something about what income she might get from that trust. And maybe there were other investment accounts she could use at this time?
She thought he had some retirement accounts at the business but once they sold that, she didn’t know where it went. Perhaps his former secretary at the office might have some direction for her but she was not sure. The human resources department was now out of state since the business sale happened so his former secretary might be able to help her get that contact info.
These are actual conversations I have had with women who came to see me well after the fact. Working with financial advisors who are sensitive to the needs of the less financially literate spouse (wife and husband) would have enabled each of them to have a better sense of confidence that they would know what will be available to them and their family members. (For more from this author, see: Deciding Where to Live After Losing Your Spouse.)