|Money tips for widows and widowers
|By Jay MacDonald
loss of a spouse is one of life's most devastating experiences. But the struggle
to survive it, especially financially, can be almost as severe a test.
Because most of us prefer to avoid
the subject altogether, it is hardly surprising that we are typically unprepared
to suddenly go on alone.
"You want to curl
up in a ball and have somebody else make all the decisions for you," says
Kerry Hannon, author of Suddenly
Single: Money Skills for Divorcees and Widows. "But
this is the worst time to do that. You need to force yourself to make your own
Statistics show that the plight of the surviving spouse
is largely a woman's ordeal. According to the U.S. Census Bureau, of the 56 million
Americans aged 55 and older, 32 percent of women and only 9 percent of men were
widowed in 2000.
Women are at a financial disadvantage
on several fronts when their spouses die. Statistically, they earn 73 cents on
the dollar compared to men and the gap widens with age, according to the Women's
Institute for a Secure Retirement (WISER). The time
women spend out of the work force to raise children or care for aging parents
often results in smaller Social Security payouts, and also costs them in pension
accumulation and lost promotion chances.
also says most women save too little of their income (about half of the 3 percent
men save) and invest too conservatively and too late.
don't start investing until they are in their late 30s or early 40s, while men
tend to start in their 20s," she says. "In their 20s, women tend to
spend on clothes or a nice apartment. They lose on compounded interest by starting
Considering that today women are
likely to live into their mid-80s on average, the combination of meager retirement
reserves, declining earning power and lack of investing experience could mean
their resources will give out before they do.
with a little guidance, the suddenly widowed can gather the pieces of their lives
and learn to fly solo.
In most cases, widows will face three transition periods:
- Attending to immediate
practical concerns -- will take one to two weeks;
- Handling financial and legal concerns -- can take from one week to several months;
- Settling tax concerns -- which can take one to two
years to resolve.
Addressing immediate needs might
better be termed "initial recovery." This is no time for hasty decisions,
according to Alexandra Armstrong, a financial adviser with Armstrong, Welch &
MacIntyre and author of On Your Own: A Widow's Passage to Emotional and Financial
"In the first few months,
even if you think you're thinking rationally, and even if you know a lot about
finance, you're not going to have your head totally on," she says.