Preparing financially for the loss of a spouse
In so many cases, investing does not head off the kind of financial disorder that leads to the most amount of stress. Losing your spouse is never easy under any circumstances, but it doesn’t have to be financially difficult as well. With a little planning, you can put certain things in place to give your family the best chance for success no matter what happens during the course of the next 5 to 30 years.
The goal of any income plan is to give you everything: an income base that is guaranteed regardless of what the stock market happens to be doing, a portion of your portfolio dedicated to growth so that you can finance future dreams and ambitions, and the ability to take care of the people you love, whether it be a future legacy or college tuition.
There are, however, many obstacles to having it all. IRAs are individual accounts, which means they don’t provide a joint income. Pensions are also sometimes set up for an individual so that nothing would pay out to a surviving spouse. Married couples also have to think about what happens to their Social Security benefit income when one spouse passes away. There is almost always the loss of one check, and if you combine that loss with the loss of a pension benefit, then things could become quite dire for the surviving spouse.
It’s helpful to know about your options before the time of disaster strikes. Some individuals today are lucky enough to have pensions, but most people don’t. They need to look at how to maximize their Social Security benefit because the surviving spouse is allowed to take the larger of the two checks according to Spousal Benefits.
If you can afford to delay one Social Security check, there are clever ways to increase those spousal benefits for married couples. One of the simplest things you can do is to let the larger of the two benefit checks grow or roll up so that the spouse can inherit the larger of the two benefit checks. This strategy can result in up to 32 percent more income or thousands more dollars over the course of a lifetime.
If you are looking at a lump-sum buyout option for a pension, you might learn how to roll this money over into an IRA or an immediate annuity that can pay out a significantly higher income than what it would have been were it to stay with your employer.
If you are a widow or widower receiving a lump-sum payout from a life insurance benefit, then you want to know how to turn that into a stream of income. ReJoyce Financial is an investment advisory firm that specializes in comprehensive planning and can help you make these decisions.