By Mike Gibbons, RICP®
The loss of a spouse can be devastating. The remaining partner is often left in an emotionally fragile state as they attempt to make sense of their loss.
There is no way to prepare emotionally for the loss of your spouse, but we can prepare for the future financially. Imagine if you or your spouse were in this position; would you be prepared? Below, we have outlined a guide to help you and your spouse prepare for this inevitable challenge.
Establish Your Estate Plan
This could seem obvious to many people, but it is the first step when planning for the future. An estate plan will determine how the individual’s assets will be preserved and managed after death. You will want to work with a trusted financial advisor to develop an estate plan that will provide for the surviving spouse and children. The estate plan could establish the deceased’s legacy to a charitable cause or fund the education of descendants, for example.
Your estate plan should include a will that is updated frequently as well as Powers of Attorney for health and financial. Additionally, you will also want to make sure that plans are made for each spouse’s funeral. You do not want to leave a grieving and overwhelmed spouse with the added responsibility of detailed funeral arrangements.
Life Insurance
Do you and your spouse have life insurance? Life insurance is a great way to protect your loved ones should you pass away. A surviving spouse can use those funds to support themselves as they may need time to recover from the passing of their life partner. The extra funds are helpful to pay the mortgage, bills, or even the children’s tuition, if necessary.
If you already have a policy but your situation has changed, be sure to update the policy so that it fits your needs. As an example, if your family has grown and you had purchased a term life insurance policy in your early 20s, consider purchasing a permanent policy for your growing family.
Of course, remember to update the beneficiaries of any policy or retirement account you may own. The account or policy’s beneficiary should be the intended beneficiary and not an ex-spouse or a deceased person.
Wealth Management Strategies
It may be uncomfortable to speak about, but you and your spouse should have an open conversation about what your income would look like without the income of the other partner. How would it change? Would it be significantly less? How would the other person make up that part of the combined income?
Life insurance is a great strategy to supplement the loss of income from a deceased spouse. But consider what the person would do with the funds once they receive them. Is there an investment strategy that would help them stretch those funds for the years they have left?
You and your spouse should consider what the new income would be and create a budget that would support the remaining spouse and any young children.
Organize The Details
Finally, one of the most important aspects of financial planning for this chapter in life is to make sure that your important details outlining your investments, savings, life insurance policies, and retirement income benefits are organized in a place that either one of you can access. This means that you both should keep a shared file that has all your account usernames and passwords and is easily accessible. Additionally, you and your spouse should have all of your important documents, like your birth certificates, Social Security cards, and other important documents organized in a place where both of you can access them.
We Can Help
Planning for widowhood is not a fun or easy task, but it is something that needs to be considered when developing a solid wealth management plan for your future. If you feel overwhelmed, that’s okay. We are here to help. Call 224-419-5550 or email me at Mike@gibbonsfinancialgroup.com to schedule a complimentary consultation. And be sure to join our free webinar, Retiring Early From Pharma.
About Mike
Michael J. Gibbons is founder and president of Gibbons Financial Group, an independent advisory firm providing custom-tailored financial planning and investment management services to pharmaceutical and healthcare professionals and their families. Mike has over 25 years of experience and spends a significant portion of his day working with pre-retirees and retirees, focusing on asset management, Social Security and pension planning, as well as retirement income preparation.
Mike has degrees in both business and psychology from Lake Forest College and currently holds his Retirement Income Certified Professional (RICP®) designation from the American College. Mike was named a Five Star Wealth Manager for 2016 and 2018* Mike is heavily involved in his community, having served on the Village of Gurnee Police Pension Board as a Community Volunteer and the St. Patrick’s Parish Financial Board. When he’s not working or volunteering, Mike loves playing golf and spending his time with his wife and children. To learn more about Mike and how he can help you, connect with him on LinkedIn, visit his website, and register for his free webinar, Retiring Early From Pharma, created specifically for professionals retiring from the pharmaceutical, biotechnology, and healthcare industries.
*Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of 2016/2018 Five Star Wealth Managers.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.