Beliefnet

No one wants to talk about creating a living will or setting up finances when you leave earth, but it is necessary to line things up for your spouse to avoid even more stress after passing. Protecting assets, having a backup for Social Security, and having a fund when income is reduced are important for any widow. Peter Bombara, CEO and founder of PCB Financial Advisory Group shared the lasting impacts are too great not to get started now.

“A lot of people aren’t comfortable talking about the subject because they don’t want to think about their husband or wife dying. But you have choices to make about your pension, your Social Security and your investments, and the implications of your choices will have a lasting impact on your surviving spouse.”

There are wrong assumptions we make. If your spouse dies you don’t automatically get their pension, 401, IRAs, and other assets without a signed beneficiary form. You need to protect all of your funds and make sure the correct people receive them, so things don’t get caught up in courts and the lawyers.

For example your IRA is not covered by a will unless a beneficiary designation form is signed. It is recommended that you cash out your IRA before you turn 60, if your spouse dies before then, take the money. There is a tax penalty, but talk to a professional on what is the best course of action ahead of time so there are no surprises.

Pensions are rare today. If you do, the amount left for a spouse is dependent on what payout that was selected. This could be monthly with the joint and survivor benefit, or based on life expectancy.

CNN Money explained that monthly will be a smaller amount.

“Many plans offer different payout options: you may choose a setup that pays 100 percent to the surviving spouse, 75 percent, 50 percent, etc. The higher the promised payout to the surviving spouse, the lower the monthly payment will be.”

The widow can receive the full Social Security benefit, but it depends on the timing. They will get the full benefits when they reach the maximum age for SS. This can change, as we’ve seen retirement age increase and concern if there will be SS in the future—overall the system can be confusing. The Social Security Administration explained how we earn one credit per $1,260 of wages earned. You can earn up to four credits in a given year by hitting the $5,040 mark. 

“The number of credits needed to provide benefits for your survivors depends on your age when you die. The younger a person is, the fewer credits he or she must have for family members to receive survivor’s benefits. But no one needs more than 40 credits (10 years of work) to be eligible for any Social Security benefit.”

Don’t know where to begin? Seek professional help to gage options now, rather than later. This will give you a peace of mind and help you  to build a better nest egg,” said Bombara.

“Most people want their spouse to do well financially after they pass away. So, as unpleasant as the conversation might seem, they really do need to talk about the money situation and make sure they have a good plan in place.”

Save now wrote financial analyst Suze Orman on her blog.

Get out of debt to free other money up. This will set you and your spouse up for success if tragedy hits. Reduce monthly bills like utilities bills, and increase energy efficiency in the home.

“Trim your utilities by spending one afternoon increasing your home’s energy efficiency: Attach a draft-blocking guard to the bottom of any external doors, add caulk or weatherproofing material around drafty windows, put low-flow aerators on your shower heads and faucets, and replace burned-out bulbs with compact fluorescent energy savers."

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