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5 financial rules for grieving spouses

November 01, 2011

Losing a spouse is one of the most stressful and heartbreaking events of a lifetime, and, sadly, an event that many of us will experience — especially women.

Dr. Kathleen Rehl, author of the award-winning book "Moving Forward on Your Own: A Financial Guidebook for Widows," described this as a "tsunami."

According to Rehl — a widow herself — more than half of women are widowed by age 65, with 56 the average age of widowhood.

Those widows who do remarry may even be widowed again, especially when marrying an older man. The unfortunate reality is that a woman who is widowed will likely experience a decline in financial well-being, making it critical for her to choose well-thought-out decisions to ensure her stability.

Practical considerations
"The early stages of grief bring shock, denial and disbelief," Rehl said.

Even those intellectually aware of these effects can be taken by surprise.

Rehl had worked with many widows in her financial-planning practice in Land O'Lakes, Fla., yet when she lost her beloved husband and business partner, Tom, in 2007, she "really got it."

She went through the same shock and at times couldn't remember things as natural as her Social Security number. Despite knowing cognitively she had a plan in place, still she experienced, however briefly, the normal fear that she wouldn't be OK.

"Every widow who comes to me is afraid she'll be a bag lady," Rehl said.

Rules to remember
These fears can lead to decisions made out of emotion, which leads us to the first rule of protection for widows:

1. No major decisions for one year.

Certified financial planner Karen Folk of Bluestem Financial Advisors in Champaign, Ill., calls this establishing a "decision-free zone."

This is especially true when the deceased spouse handled the financial affairs, and the learning curve to figure out what there is and how the bills are paid can be steep.

This policy also gives the widow the freedom to defer saying yes or no to various financial requests until she is in a better position to evaluate them.

There are still things that need to be done, and some decisions can't wait, of course. While working through those administrative tasks such as filing life-insurance claims, transferring ownership of assets or updating beneficiaries, Folk advised to "get a little notebook, keep it with you at all times, and write down everything you do, who you called and what number."

Grieving spouses are often unable to concentrate or remember details, and this notebook can help you go back and find out what you were working on last.

2. Beware the financial wolves.

Rehl has heard her share of stories of widows who have been taken advantage of by financial "wolves."

She relayed the story of a woman in her 70s who was visited by her husband's agent with her life insurance proceeds: "Before he left, he had sold her a policy on herself and said her husband would have wanted her to have this. He used the whole amount to buy the policy that came with a big surrender charge."

Thanks to a phone call from Rehl, the company refunded the money in full for the inappropriate sale.

Rehl advised listening to your "tummy brain" — your gut instinct. This is also where Folk's decision-free zone policy comes in handy: Your instincts might be numb immediately following a loved one's death.

3 Don't run away from your house.
Again, no hasty decisions. Right now you may be feeling as if it is too painful to stay in your home or that moving in with family would solve your loneliness, but a year can make a big difference.

Are there things you can do in the meantime to feel a little better? Rehl suggested making minor changes in your home, such as selling your husband's chair if it's too hard to be near. She also cautioned against moving out of your community in the early stages.

You may be overlooking such important considerations as your support network, social circle and medical providers.

4. Be realistic and get an objective view of your finances.

One thing that comes in abundance with a life-insurance check is advice about what to do with it. You'll get lots of unsolicited recommendations from neighbors and friends telling you to pay off your mortgage, invest in a hot stock or set up a trust, for instance.

Instead of depending on your neighbor or your neighbor's adviser, Folk recommended looking for your own unbiased adviser, who can evaluate your entire financial situation and give objective advice.

According to Folk, it is common to feel guilty about getting money because someone died. The beneficiary may want to get rid of it right away. This can lead widows to feel as if they have more money than they will ever need and want to make a lot of gifts.

"Maybe they do and maybe they don't," Folk said. "This is why your spouse got this insurance, so you can use it to take the time to figure out what your life will look like."

The sum of money that looked so large may not look as plentiful after taking into account your future needs. If, after doing the analysis, you find you truly do have more than you need, then you can make gifts. Which leads us to our last rule.

5. Don't be a purse for others.
Financial wolves don't always come in the form of advisers. They can also come in the form of family members or new suitors.

Rehl warned, "You may be approached by family members asking for part of their inheritance early," or gentleman callers looking for "a purse, a nurse or a mother."

Enjoy a nice dinner or night out, but be careful of your new friend's intentions.

ABCS OF WIDOWHOOD
Dr. Kathleen Rehl, author of "Moving Forward on Your Own," offers three strategies to new widows:
A = Always ask questions. "Why is that financial recommendation good for me?"
B = Buyer beware. "If it looks too good to be true, it probably is."
C = Care for yourself. "Spend some of your time and your money with inexpensive self-care activities that improve your overall well-being."

Erin Baehr is a certified financial planner at Baehr Family Financial in Stroudsburg and Randolph, N.J. She can be reach at www.baehrfinancial.com.

Erin Baehr

Pocono Record

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