Navigating Financial Decisions Entering Widowhood

Most women become widows at just 60 years old, right when they're finalizing retirement plans and making critical Social Security decisions. Here's what nobody tells you. After the death of your spouse, your brain literally doesn't work the same way while you're grieving. Yet people around you are pushing you to make life-altering financial decisions. Today, I'm giving you a timeline of what needs to happen soon, what can wait six months, and what absolutely should not be decided on within your first year of widowhood. Because the decisions you make in the next six to eighteen months will determine your financial security for the next twenty to thirty years. And many widows are making at least two or three major mistakes that cost them hundreds of thousands of dollars over their lifetime.
So whether you've recently lost your spouse, you're preparing for the inevitable, or you want to help someone who's going through this right now, this episode could be the difference between financial clarity and decades of financial struggle.
Welcome to Retired-ish. I'm your host, Cameron Valadez, author of the book Finding Clarity and Confidence When Starting Over. Today, we're tackling one of the most critical life and financial transitions you'll ever face, and that is widowhood. I personally have not had to deal with this. However, I have worked with countless families and widows over my career and have been very involved in guiding women through such a difficult time.
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Today I'm going to walk you through the essential financial concepts, decisions, and ideas that you should eventually begin to work on after the passing of a beloved spouse, and sort of a timeline to follow to accomplish these things. I'll also cover some of the mistakes that can fog your financial future.
Please note that this is not an episode about how to settle an estate. In fact, we've already done an episode on that. I will provide a link to that in the show notes for the episode if you'd like to look into that. The topics I discuss today are important regardless of whether or not you were the breadwinner between the two of you, or you were the spouse primarily maintaining the household and taking care of children, for example, maybe out in the workforce part-time or not at all. Doesn't matter.
For example, you may have been the one that paid the household bills, but you weren't involved in any of the investing and the retirement, estate planning, or anything of that nature. You may be unfamiliar with the assets or debts that you have built up as a family.
Or maybe you were the breadwinner. And even though you made all the money, you were actually less involved in the finances than your non-working spouse because you felt like you had no time to spare after coping with your job or career, the household, children, and your spouse. So without further ado, let's dive in.
Losing your spouse doesn't just break your heart. It completely upends your financial life and typically changes the trajectory of your life in many other ways. This is especially true when you lose a spouse in your earlier years into your pre-retirement years. And as shocking as this may sound, the average age of widowhood right now in America is somewhere around 59 years old.
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That means most women face this transition during their late 50s or early 60s, right when they're finalizing retirement plans and making critical decisions about things like Social Security or health care decisions, and determining whether they will have enough money to last the next 30-plus years in retirement. So the timing of this, on average, couldn't be much worse.
First, we need to address the elephant in the room, which is the fact that your brain isn't working the way it normally does when you're going through something like this. And that's not a flaw, it's just biology. Initially, the grieving process will certainly impact your cognitive function and ability to make rational decisions. And therefore, it's oftentimes not the best idea to make any major financial decisions within about the first year or so. This is because you might have difficulties processing complex information, remembering details from conversations, weighing multiple options and juggling those options simultaneously, making sequential decisions without getting mentally exhausted, and focusing for extended periods of time.
You know that you're financially savvy, you know that you're intelligent, but right now your brain is dealing with trauma while possibly the people around you may be asking it to understand and process a huge amount of information about things like whether or not you're going to continue to work or go back and win paying off the mortgage, helping out your kids, selling and downsizing your home, moving closer to your children, you name it. There's a huge list. These are big decisions that are important, but most of which don't need to be solved right away. That said, of course, you're struggling. Anyone would be.
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However, there are certainly decisions you'll likely need to make in things you'll want to do in the months immediately following that can help you find clarity in your financial future, or make it feel like you're wearing a blindfold in a maze, which will cause an unbelievable amount of additional stress. Most of these initial things will have to do with getting financially organized. And in our experience, some widows find this therapeutic, some find it stressful. Either way, if you need help, just ask someone. Don't beat yourself up for not being able to handle everything at once. You're not incompetent, you're just grieving. There's a massive difference. Because of some of that temporary cognitive impairment that you'll likely experience, we want to focus on true immediate concerns rather than tackling a whole financial or retirement plan all at once.
This is why I suggest you begin to get organized and create some sort of timeline that separates urgent financial tasks from things that can wait. So, noting down some of these critical steps and writing actual dates as goals to get them done by can help set expectations for yourself and alleviate some stress that you may have. Remember, not everything needs to be nor should be done all at once. So here are some of those immediate things that you want to consider doing, like within the next few weeks immediate.
The first one may seem obvious, but you'd be surprised by what you may overlook during such a difficult time, and that is to ensure that necessary bills continue to get paid. And then try to make sure they get paid going forward automatically. And this is so important. You don't want to fall behind, especially on any potential, let's say, credit card payments, since that interest adds up quickly. And we don't want you getting into a hole and making things worse than they already are.
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A prime example of this could be the fact that your late spouse had maybe the mortgage or utilities on autopay, but it was out of their personal bank account. So this will likely need to be dealt with rather quickly.
The next is to locate important documents such as wills, trusts, insurance policies, account statements for things like retirement accounts and bank accounts, you name it, marriage certificate, birth certificates, if you have any minor children in the household, maybe military discharge papers, Social Security cards, numbers, etc. The deeds to property. It's important to note that sometimes you may actually need some of these documents first before being able to do things like pay bills or change accounts for autopay if they were held in your spouse's name only. And maybe they forgot to list you as a beneficiary on their bank account. This happens more than you think, and it kind of adds a wrinkle to the situation because now things become very urgent, and now you're having to locate those documents rather immediately in order to make sure that bills get paid. You'll also need a lot of these documents in order to apply for any potential benefits later.
Next, you'll want to get eight to ten certified copies of the death certificate. You'll likely need most, if not all, of them at some point later. And just remember, while going through this, you're getting organized now to make things more clear and less stressful later on. You'll also want to make sure you have access to enough cash for immediate expenses or any emergencies that might come up. So while you're already going through a tough time, things can happen that makes your life even more stressful if you're not prepared.
So, for example, if it's the middle of summer, your AC all of a sudden might go out, and you need to replace it, or your tires go bad, et cetera.
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And so, preferably, you want access to funds that are held outside of any pre-tax retirement account, like a 401(k) or IRA, since there will be important yet more complicated decisions to make with those types of accounts later.
Wherever it comes from, just having access to a small lump sum of cash will be very helpful and make sure you keep that aside just for any emergencies in case they happen during this first year or so. And again, even though this is just one of the first baby steps in this process, if you still feel overwhelmed, that's okay, and that's very normal. So don't be ashamed to ask for help if you need it.
Next, we have a list of items that are a little further out on this timeline, such as about a month or so. These are definitely important, but don't need to necessarily be dealt with ASAP. The first one is to contact any life insurance companies to start benefit claims. If your spouse was employed by an employer, then they may have also had a life insurance policy through the employer, so make sure to check with them as well.
If you aren't sure whether or not there were any policies, you should call your financial advisor or insurance agent if you already had one. They may have more information, and they will be able to access it very quickly, and can save you a lot of stress and time, so you're not running around looking for papers or scouring files on your computer. If you don't have either of those professionals in your life, you should check the mail, of course, for any correspondence that comes in.
Again, check pay stubs, if you can locate any from your spouse for any deductions on there for maybe life insurance premiums they were paying for at work. You'll want to check bank records for any premium payments to certain companies and read any wills or trusts, and look for specific policy information that might be written in them.
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And of course, check your important physical files around the house and digital files for a copy of any policies that might exist.
Next, you'll want to notify banks, investment firms, estate attorney, if you ever got a will and trust and things like that done, your tax professional, if you use one, financial advisor, insurance agent, and credit card companies, notify all of them of your spouse's passing.
And regardless of your or your spouse's age, you'll definitely want to contact the Social Security Administration as well to inform them. And also just a tip on Social Security. If you are caring for children under age 16 or they're 16 and older and were disabled before the age of 22, you may also want to apply for limited Social Security Survivor benefits for you and your children. Just by calling Social Security and informing them of your spouse's death is not the same as applying for benefits. So don't assume that they will just automatically know what's going on and start paying you benefits if you should be receiving any. So you'll have to let them know that you want to apply for that.
Next, you'll want to begin to identify all accounts or assets that you have or may have, and debts. Note that this one may take some time. And so you might want to lean on any professionals that you currently work with or that you know or are friends with. To help you do this. They can typically save you a lot of time, hassle, and headache. For instance, there may be certain accounts or debts that you had no idea you had since the statements maybe were electronically sent to your spouse's email or only available online on their login that you didn't have. And so it may take quite a while to figure some of these things out.
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Lastly, try to get an appraisal on any real property that you own or own jointly with your spouse, even if it was held in a revocable living trust that you had, because this may come in handy later for tax purposes.
And this doesn't need to be done within the first month or so whatsoever, and can be put off on the back burner for a little bit, but just don't let it get too far and forget about it entirely, because it can end up being very important in the future for tax purposes, and save you a lot of money.
Moving along on our timeline at around six months out, you will want to start to review and update beneficiaries on your own financial accounts and update your own will, trust, your power of attorney, and healthcare directive, also known as a living will or healthcare power of attorney. And this is particularly important because oftentimes when you had estate planning documents done initially, your spouse is typically the one you choose to make financial and healthcare decisions for you if you become incapacitated somehow. So now, of course, you will need to choose someone else. And it's better to do this sooner than later, but again, it's just not one of those things that takes immediate priority. This is also about the time where I might start making decisions about any potential retirement accounts you may have inherited from your spouse.
So retirement accounts such as 401(k)s, IRAs, Roth IRAs, things like that, they're subject to special provisions. And oftentimes, as a surviving spouse, you will have several options that all have different wealth-building and tax consequences.
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I don't mean to sound self-serving here, but this is definitely an area to strongly consider hiring some sort of financial advisor to help navigate these decisions because they can substantially impact your finances moving forward on your own and require careful planning.
And lastly, here are some of the things that can wait six to twelve months or even much longer. It's just going to be up to you and how your progress is going so far. The first major one is any decisions about selling the house and moving, possibly to downsize or maybe get closer to children. This is a major decision. It's not just financial. Oftentimes, it's very sentimental. Uh, so there's no extreme rush here. And there are several things about this that you're going to want to consider.
The first thing is obviously, where can you see yourself spending potentially the rest of your life? Wherever you go next may be the last place you end up. Will you try to work wherever that is? What hobbies do you see yourself getting into? Things like that. What are the possible regrets you would have, if any, leaving your current home? And do those outweigh moving? Where will you want to be when you're significantly older, and if you require care at some point? Right. Are you going to be closer to family, or do you plan on having other caretakers, things like that?
And again, like I mentioned, proximity to family, what are their plans? If you relocate closer to, let's say, your children, what's the likeliness of them leaving shortly after? Right. That would be pretty devastating. You'll also want to look at the cost of the replacement home or condo or whatever it may be, and the new property tax implications. Some states may allow or partial property tax transfers to a new home if you relocate within the same state. And how will you fund the purchase of the new property? If your current equity won't be enough.
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You don't want to drain a retirement account like an IRA or 401(k) to buy a more expensive home. Are you going to downsize to a more manageable home, right? You're going to go from the big two-story to a smaller one-story that you can get around and grow older in.
Next is you want to have a plan for what your cash flow will look like after the move if you decide to move. So again, your property taxes will definitely change. The sales taxes in the area where you relocate to can be much different. Will you have a mortgage, right? Will it be a bigger mortgage if you had one before? Will the utilities be different? Are there additional local taxes and things like HOA fees? Those are things you'll want to think about.
You'll also want to consider potential tax implications on the sale of your current home. This can depend on many things, such as the way your home is currently titled on the deed, whether or not you live in a community property state, that's actually a big one, the amount that you purchased your home for, whether it was purchased by one spouse before you got married or during the marriage, what improvements have you made to the house, and how much has it appreciated over time?
Those are just a few things. There is a lot of different implications tax-wise when you sell your home. On a side note, I'll just throw this in there. There is also a two-year period after your spouse's passing where you can get a larger exclusion from any potential capital gains taxes that may be owed. But this may not be a big factor if you're located in a community property state. So definitely get with your tax professional on this if thinking about selling your home. And if you have concerns and you're going to sell your home within the first few years, there can be some different strategies to go through.
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What I've been talking about is referred to as the Section 121 Exclusion, if you care to look more into it.
The next thing that can sort of go on the back burner is a complete financial plan restructuring. So, going back to the drawing board will eventually be necessary since your financial goals, your investment strategy, your tax situation, and your estate and legacy goals will likely be materially different now that you're on your own and will probably continue to change over time.
So during this planning process, you will also want to verify things like when it will make the most sense to collect survivor benefits versus your own retirement benefits from Social Security, if you're in your 60s when your spouse passes. And lastly, any other major investment strategy overhauls those can usually wait.
Now, I do want to put a huge caveat sticker on this one because there are certainly instances where an investment overhaul is needed much sooner than later. And this is usually the case when your spouse was involved in very risky investments and complicated strategies because they were either overconfident in their investing abilities, which is very common for men, or they felt that they could take big risks because they would have time to make up for any potential losses in the future. It could also be something much more innocent. In the sense that, you know, maybe they have a large part of your net worth or their pay in the form of stock compensation from their employer. And so the majority of the money hinders on the value of just one company, which can be very risky for you moving forward.
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And this may not be something that they saw as a big risk since they worked for that company and only have that insider's perspective, and they think, you know, nothing can go wrong. If you're not too investment savvy, it may be hard for you to spot the actual risks that are being taken with the investments that are now under your control. So I would advise you to reach out to a financial professional to at least get a second opinion to help you assess the risk being taken. And more importantly, the risk that actually needs to be taken moving forward, per your new situation.
Losing your spouse is devastating, certainly emotionally and usually financially. And because it can be financially devastating, it typically makes the emotional devastation even worse by adding more stress at the absolute worst time in your life. And the financial transition that comes with it can definitely feel overwhelming because it is overwhelming. This example timeline isn't about procrastination because, of course, you could do any and all of these things whenever you please, but it's more about strategic decision-making when your brain is operating at reduced capacity. You're triaging, you're not avoiding. You should always give yourself permission throughout this process to say, I need time to think about this for those non-urgent decisions.
Here are the main things that I want you to take away from this episode. The first is don't ever feel incompetent. Your brain is dealing with grief while people may be asking it to process complex financial information. That's why you may struggle, not because you're incapable. Two, you don't have to figure out everything immediately. Create a timeline that separates urgent tasks from things that can wait.
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And again, give yourself permission to take time on major decisions. Number three, get professional help or a second opinion. This is not the time to DIY your financial planning and major life-changing financial decisions. Talk to others you may know who have gone through the same struggles, and find professionals that understand you and what you're going through and that have the capabilities to solve the financial puzzle that you have. Number four, your circumstances have changed. Your goals will likely change, and so your financial strategy needs to change with them. That's not a weakness. That's just reality.
The decisions you make in the following six to eighteen months can affect your financial security for the next twenty to thirty years plus. So take them seriously. Get educated, ask questions, and don't let anyone, including any well-meaning family members, pressure you into decisions you're not comfortable with. You will not just survive this. You will actually build a financial future that can make sense and can be simplified. And that's probably the most important thing, in my opinion. That way, you can go on about living your life without always stressing about money. But it starts with understanding the truth and reality of your situation and then making informed decisions.
That's all for today's episode. If this was helpful, share it with another widow who needs to hear it. If you haven't already, subscribe to and follow the show on your podcast app. That way, you can get notified each time a new episode drops, which is every two weeks. And if you're looking for someone who you can talk to and that will listen to your situation and your story, and you want help putting together that financial puzzle moving forward, you can reach out to us at plannablewealth.com or send an email to info@plannablewealth.com, and we will do our best to help, or at least point you in the right direction.
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We will also include a link on the show notes webpage where you can schedule a consultation to receive my book for divorcees and widows for free. So if you're interested, make sure to check that out. Also, be sure to check out our YouTube channel and sign up for our monthly newsletter to get more useful information on retirement planning, investing, and taxes once a month. The newsletter often dives deeper into some of the topics discussed on the show, as well as useful guides and charts available for download. As always, you can find the links to the resources we have provided in the episode description right there on your podcast app, or you can head over to retiredishpodcast.com/82. Thanks again for tuning in and following along. See you next time on Retired-ish.

[00:27:06] Disclosures
The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific tax issues with a qualified tax or legal advisor.

Cameron Valadez is a registered representative with, and securities and advisory services are offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC.

Tax and accounting-related services offered through Plan-It Business Services DBA Planable Wealth. Plan-It Business Services is a separate legal entity and not affiliated with LPL Financial. LPL Financial does not offer tax advice or tax and accounting-related services.