Managing Money Through Grief: 10 Tips for Widows and Widowers

Losing a spouse is often considered the single most stressful life event. What often compounds that stress, however, are the many financial questions facing the surviving spouse: How will they support themselves and what benefits should they claim? Should they adjust their investment strategies? Should they stay in their homes or downsize?

Widow Kathleen Rehl found that she was in a better position than most to grapple with such questions. Though she was devastated by her husband's death some ten years ago, Rehl's career as a financial planner meant she was still well prepared to manage her finances on her own.

Her husband's death, however, inspired her to take a new path in her career: to educate fellow widows who weren't as financially savvy and who may be vulnerable to making bad decisions.

"Our brains function differently when we're facing big-time stress like losing a spouse," said Rehl, the author of the book Moving Forward on Your Own: A Financial Guidebook for Widows and the free guide, Financial Steps for Recent Widows. "If a widow or widower makes big irrevocable decisions during that stressful time, they could make the wrong decision because they don't understand what they're doing."

A research study led by Rehl and published in the Journal of Financial Service Professionals found that women, in particular, see their confidence in their finances decline after losing a spouse. Rehl added that a forthcoming study, on the other hand, will show that men are less likely to lose financial confidence after losing a spouse.

But no matter your gender and your money management confidence, all widows and widowers could benefit from a few basic financial tips:

Only Take Care of the Most Pressing Financial Issues First

Since the period immediately following a spouse's death may be the most stressful, avoid hastily making major financial decisions during a time when your decision-making abilities may be compromised. Instead, focus on what can't wait, such as determining what you can afford to pay for funeral costs, Rehl said.

Don't Be Hasty With Career Decisions

If you had a job at the time of your spouse's death, think twice before deciding you're too devastated to continue with your work, Rehl said. A job, of course, provides steady income, but some also find other benefits to working following a spouse's passing.

Rehl said she worked with one widow who considered leaving her career but ultimately determined that she valued the pride she took in her work and the friendships she'd made with those at her company. "Her job was a lot more than just a paycheck for her," Rehl said. "It provided psychic income."

If You Haven't Yet Filed for Social Security, Consider Your Options

If both you and your late spouse collected Social Security benefits, you would only be eligible for one Social Security payment—whichever one was higher—following his or her death. Be sure to budget accordingly.

It's important to note that widows and widowers don't have to wait until retirement age to receive the Social Security benefits related to their spouses' years paying into the system—they are eligible for Social Security survivor benefits starting at age 60. They may later choose to file for their own social security benefits at retirement age to replace the survivor benefits.

Surviving spouses may also choose to delay collecting survivor benefits while collecting their own Social Security benefits at age 62. In either case, Social Security benefits grow when one account remains untapped for a few years.

Mike Piper, a certified public accountant who runs the investing blog, Oblivious Investor, says that survivors who collect from one Social Security account while letting the other one grow are essentially accessing "free money." Unfortunately, Piper said, "a lot of times people simply don't know about it, so they don't file." Consider consulting a financial professional to determine what choice is right for you.

Collect Other Benefits

You may be eligible for a death benefit related to your spouse's annuity, if he or she had one, or veterans' benefits if your spouse served in the military. And of course, if your spouse had his or her own life insurance policy or a policy through his or her employer, you don't want to forget to file for life insurance benefits. Just be sure that you understand the various life insurance payout options before deciding on one. For employer-sponsored life insurance policies, contact the human resources department of your late spouse's employer for help.

Take Stock of Your Late Spouse's Retirement Accounts

If your spouse had a tax-advantaged retirement account and had already begun taking distributions from it, you would be required to stick to the same distribution schedule, even if you personally hadn't reached retirement age. You may have other options, but there are several financial and tax considerations, so you should look to discuss your particular case with a professional.

Wait to Change Your Joint Checking Account Information

It's not about nostalgia: It's practical to leave your spouse's name on your joint checking account for about a year because, during that time, you may still find yourself receiving checks in his or her name.

Consider Whether to Adjust Your Investments

Before your spouse died, he or she may have favored a particular investment strategy. Now that you're on your own, you may decide that strategy isn’t the right fit for you now that you are on your own. You may also decide to direct some of the money from death-related benefits to new investments. As with any investment decision, it's important to do your homework before leaping into the market, and try not to let emotions that can cloud financial judgement get in the way.

Be Careful About Home Decisions

Some survivors may be tempted to quickly sell their homes following a spouse's death. While emotionally, that may feel like the right choice, Rehl warns that financially, it could be the wrong one. If the housing market is in decline at the time you want to sell, for instance, you may be better off waiting until a recovery is afoot.

Beware of Fraud

Unfortunately, there are many stories about senior people—particularly, single seniors—being exploited by scammers. If you worry that you're being targeted, you can reach out to FINRA's free senior helpline. Call the Securities Helpline for Seniors at 1-844-57-HELPS (4-3577).

Consult the Experts

Financial professionals can help you get a hold of your finances as you adjust to life without your late spouse. If you're considering working with a specific financial professional, be sure to learn more about his or her background through FINRA's free BrokerCheck tool.