Although often avoided, planning for widowhood can be crucial in avoiding financial crisis if the unthinkable happens, recent research from Merrill Lynch suggests.
To better understand how this life-changing event can affect a surviving spouse, Merrill Lynch partnered with Age Wave, an aging population research firm, for a report called “Widowhood: What to do when your spouse dies.”
The research shows that almost 78% of widows or widowers are women, yet in many cases they are not prepared for the financial decision-making, reduced income, and mounting paperwork that can follow the death of a spouse. In fact, 60% of both men and women are immediately burdened financially when a spouse dies.
“Only 14% of widows and widowers say they were making financial decisions before their spouse died,” Maddy Dychtwald, co-founder of AgeWave said in the release. “But once they are widowed, the overwhelming majority – 86% – report having to do so.”
The research states that working with a financial adviser can help alleviate the financial burden and uncertainty.
Christina Harmes, assistant manager with C2 Reverse Mortgage in southern California, said she has experienced firsthand the advantages of including a reverse mortgage in long-term planning.
“Some of the most loving situations I have seen are where the husband put the reverse mortgage in place before he died,” she said. “The widows often express how grateful they are that their husband knew to take care of them like that.”
Overall, being forced to suddenly handle finances and make complex money-related decisions gave the consumers more confidence, with 77% of interviewees saying they “discovered courage they never knew they had.”
“In fact, 72% say they now consider themselves more financially savvy than other people their age, and that is empowering,” Lisa Margeson, head of retirement client experience and communications at Bank of America Merrill Lynch, said in a statement.
Harmes said that she has also assisted widows in opening reverse mortgages after the death of a spouse, and agrees that taking the financial reins can boost self-assurance.
“I’ll talk to clients a year or two later and they just sounds so much more self-confident and secure,” Harmes said.
Written by Maggie Callahan