Financial Wellness for Widows

Understanding and planning how to manage finances can empower you and your family after the passing of a spouse.

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by NEA Member Benefits

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Key takeaways

  • Over a third of all marriages end in widowhood.
  • On average, women live longer than men so widows may experience a significant income loss.
  • Making plans for your financial security as a widow will give you the confidence to take control.

Benjamin Franklin supposedly stated, “…in this world nothing can be said to be certain, except death and taxes.” Most everyone understands the importance of tax planning. But “death planning” makes many people uncomfortable and often it gets pushed to the back burner.

Women are four times more likely than men to outlive their spouses, so it’s important for women to plan for the possibility of widowhood and become more financially empowered.

Longer lifespans require more income

According to the Women’s Institute for Financial Education (WIFE), 35% percent of marriages end in widowhood. More than 4 in 10 women age 65 and over are widows and a third of women who become widowed are younger than 60.1

On average, women tend to live about five years longer than men, so many women could spend 15 years or more as widows. And because women may earn less than their husbands, they can experience a greater loss of income once they are on their own. A survey of recent widows conducted by the Women’s Institute for a Secure Retirement (WISER®) found that 49% of the women lost at least half of their income after the passing of their husbands. The combination of reduced income and longer lifespan can put widows in a more precarious financial position and should be a call to action for women to save more throughout their lives. It isn’t called “survivorship” for nothing!

Sharing financial responsibilities gives you an advantage

Spouses who share financial planning and money management duties equally are better prepared to go it alone when one spouse dies. But too often, only one spouse makes the bulk of the decisions, which can leave the surviving spouse scrambling to decipher finances during an emotionally stressful time.

As you plan for the potential of survivorship, ask yourself:

  • Will I have easy access to cash accounts and do I know how to pay all the bills?
  • Do I have a relationship with our financial planner, accountant and attorney?
  • Do I know where all of our financial papers are located, such as life and health insurance policies, brokerage statements, bank accounts, safe deposit boxes, loan documents, wills and trusts?
  • How are assets such as our home, car and retirement accounts titled?
  • Are the beneficiary designations up to date on all accounts?
  • Am I entitled to my spouse’s pension and Social Security benefits?

Planning equals power

Planning ahead can help make survivorship more survivable. Here’s a quick overview of five major financial issues a widow may have to face.

1. Pension benefits

Pensions from private employers are required by the Employee Retirement Income Security Act (ERISA) to provide a benefit to the surviving spouse. Generally, if a spouse dies after beginning to receive pension benefits, the surviving spouse may be entitled to 50% of the benefit. If the spouse dies before taking pension benefit payments, the surviving spouse may instead receive a pre-retirement benefit. A couple should make pension benefit survivor elections together.

Pension plans for educators are not covered by ERISA regulations, so rules vary by state. Ask your state pension administrator to explain spousal benefit rights.

2. Social Security

If a woman is over age 60 when her spouse dies, she may be entitled to a one-time death benefit and survivor benefits from Social Security if both spouses meet certain eligibility requirements. Note that Social Security benefits may be reduced by a third or more for widows so other sources of replacement income need to be established.

Younger widows with children may be entitled to additional Social Security benefits that act like a form of life insurance for dependents.

Divorced women may be eligible for benefits when their ex-spouse dies as long as the marriage lasted 10 or more years and the widow remains unmarried.

Social Security survivor benefits must be applied for in person. Call 1-800-772-1213 for an appointment. More information can be found on the Social Security website and on WISER®.

3. Retirement accounts

By law, a spouse is the beneficiary for employer-sponsored retirement plans such as 401(k) and 403(b) plans. But it’s a good idea to make active beneficiary designations and keep them up-to-date, particularly if there is a divorce in the mix. To name someone other than a spouse as the beneficiary in these plans requires the consent of both spouses. The surviving spouse may be able to receive the balance in the deceased spouse’s plan in a variety of ways, depending on plan rules.

With IRAs and SEP-IRAs, the surviving spouse does not have the same beneficiary protections. A spouse must be specifically named as the beneficiary. Again, regularly review all beneficiary designations to prevent surprises after the fact.

4. Life insurance

In addition to life insurance purchased by a couple, widows may be entitled to insurance proceeds from workplace policies. Check with the deceased spouse’s employer to learn about any employee benefits for survivors.

5. Taxes

Taxes are complicated enough in the best of times. But the death of a spouse can add even more complexity. Work with a tax pro to determine which benefits are taxable and if estate taxes come into play. Generally, life insurance payouts are not taxable. But if the insurance money is invested, earnings may be taxed. Distributions from retirement accounts may have tax consequences unless they are rolled into another tax-deferred account such as an IRA.

When selling a primary residence, individuals can exempt $250,000 in gains from the sale price, reducing or eliminating their capital gains taxes. If a widow sells her home within 2 years of her spouse’s death, she can add together both her own and her deceased husband’s exemption for a total exemption of $500,000. This allows many widows to avoid paying capital gains taxes on the sale of the family home.

Take your time before making big financial decisions

Losing a life partner is emotionally wrenching and often confusing. Many financial advisors suggest only focusing on immediate needs, including paying funeral expenses, household bills, the mortgage, credit cards and insurance premiums, and postponing the big financial decisions, such as selling the house or revising financial plans. Allow time for grieving so decisions can be made with a clear idea of long term needs.

While family members are invaluable for providing emotional support, they often are not the best representatives for making financial decisions because they may stand to benefit from how money is distributed or invested. Consult with trusted experts, such as your financial advisor, accountant and attorney, as you navigate the process and take control of your life.


1 U.S. Census figures