Widow/widower financial preparedness 101: 5 things to do right now

Couples often divvy up household duties: One person cooks, the other does the dishes. But because women live an average of four years longer than men, according to Census data, if the man takes the lead on family finances, the woman could be in for trouble one day. Here are five things couples should do sooner rather than later to be prepared.

1. Communicate!

“A lot of times couples don't communicate as much as they need to with each other," says Leah Miller, CEO of Red Anchor Wealth Management. That's true whether the topic is bucket lists, financial plans or personal fulfillment. Discussing the end of life is never easy, says Al Hicks, partner and certified financial planner at Summit Planning Group. But communication can also be a way of reawakening your love for your partner, and the best way to rediscover the person you love is “by talking about your goals and your bucket list.” Also, don’t be afraid to ask those with financial expertise for help, and don’t limit these discussions to spouses. Opening up the discussion of personal and financial goals to a wider circle of family members is a great way to keep everyone on the same page.

2. Work out beneficiary issues

One of the most important things Hicks thinks every retiree should do is “make sure your beneficiaries are up to date.” It sounds simple, but it’s a problem he sees frequently. “Oftentimes the beneficiaries have been updated on the form, but it never got correctly updated electronically” at the company handling retirement accounts, says Hicks. “Then, upon death,” Hicks notes, surviving retirees “can end up running into a whole host of problems.” Similar issues can develop after corporate mergers, when beneficiary data is sometimes not transferred properly. “It happened to one of my clients, and it took five months to resolve,” Hicks says. “The beneficiary takes precedence over the will,” notes Hicks, so it’s important that it's correct.

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3. Familiarize yourself with paperwork and your spouse’s household jobs

Even though most couples share at least some household duties, many widows and widowers struggle with some of the chores that their spouses did. Hicks recently brought 10 of his clients who are widows to a hardware store, “because they didn’t know how to start their lawnmowers.” Getting to know these jobs while you and your spouse are enjoying your retirement makes the transition less jarring after a spouse passes away. Financial paperwork is also often managed by one spouse, and so organizing this during retirement can save the surviving spouse a headache during a trying time. “Retirement is a time when you should clean up old records,” says Hicks. So, save your spouse and children the complication of dealing with ancient financial documents.

4. Simplify your accounts

Many retirees have multiple IRAs. But after they turn 70½, they need to begin taking  the required minimum distribution set by the IRS. For those with multiple accounts, this means a mound of paperwork. But if the accounts are combined before mandated distributions, it only requires one set of paperwork. That doesn’t mean you have to put all your eggs in one basket, though. “You can still have as many investments as you had before under the umbrella of the IRA. It’s just in one place,” Hicks says.

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5. Work together to leave a legacy

All retirees with children hope to leave their descendants some sort of legacy. “The first step in ensuring an inheritance is to make sure it’s not negative,” says Tom Warschauer, professor of finance, emeritus, at San Diego State University. The best way to do that isn’t always just through stocks, bonds and cash: Insurance can play a role. Medicare supplemental insurance is usually a smart way for retirees to stay sound financially, but the prices can vary widely. Shopping around can save hundreds or even thousands each year. And for many retirees, “there is no better way to transfer assets in our country than life insurance,” Miller says. “It comes out the other end tax-free. If someone has the good health to qualify at a reasonable rate,” they should take advantage.