After initial grief, new widows must reexamine their finances

My husband died after a short illness 13 years ago. I was brokenhearted, and my anguish seemed endless.

However, I slowly emerged from my “stage 1” deep grief/numb phase of widowhood.

I entered “stage 2” of widowhood — growth — when it’s time to take care of business, including money matters. The fog lifts and your thinking becomes more normal.

“I stopped feeling like I had a Jell-O brain,” one widow told me several months after her husband’s death.

Previously postponed important financial decisions can now be addressed. It’s time to do a frank review of your income sources and expenses.

Remember to include investment income in addition to your paycheck if you’re still working or Social Security and any pensions payments are received in retirement. If there’s less money coming in compared to what goes out, how can you increase income or reduce expenses? If you have excess income, what does this tell you?

If you wisely parked life insurance payments you may have received in a money market account, now it’s time to think about longer-term uses for those funds. Still in your working years? Maybe you’ll invest some of that money in your career by earning advanced training to enhance your employment income. 

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Think about staying in your current house or downsizing in the future to a more easily-managed residence on your own, with lower expenses. If you own a second home, evaluate if it’s appropriate to keep the vacation place now that your spouse is gone. 

This is when you’ll review your investment portfolio. What you and your husband previously decided about your money may not be appropriate for you after his passing. New plans should reflect your transition. Your professional advisors can help you choose assets wisely.

Below are two important tips that are especially relevant for new widows who want to take action and move forward.

1. Don’t be controlled from the grave. Several months after my friend Jane’s husband died, she felt nervous about her investments. Her late spouse, a retired doctor, enjoyed “playing the stock market daily,” Jane said.

He spent most days researching companies and also was lucky with his stock picks.

“Now I’m a nervous wreck with nobody paying attention to that brokerage account since Fred’s gone,” Jane told me. “I never was interested in all that stuff.

“I don’t even know what he bought or sold,” she said. “I’m afraid there might be another market crash. What happens to me then?”

Like most widows, Jane wanted to feel financially secure. She preferred spending time with her grandchildren and other interests rather than worrying about her investments.

At Jane’s request, I reviewed her portfolio. As suspected, the retirement account she inherited from her late husband held a high percentage of volatile foreign stocks. These were not appropriate for a widow in her mid-70s who wasn’t interested in “playing the market.” She agreed to reallocate her money into a diversified and balanced portfolio of mutual funds, bonds and cash.

But when it was time to sell her husband’s investments and buy the new choices, Jane froze. “I just can’t do it,” she said. “It’s like I’m slapping Fred in the face, saying his decisions were wrong.” She felt disloyal in wanting to exchange his volatile stocks for more conservative investments. Yes, Jane understood why she needed to make changes, but emotionally it was as if Fred controlled his wife from the grave.

Jane and I talked again about how investments that had been acceptable for her as a couple with Fred were no longer right for her as a widow. That freed Jane to move forward, giving her peace of mind. (By the way, had Jane stayed in those volatile stocks, she would have lost most of her money in the market crash of 2008.)

You, too, may benefit by reviewing your investments in your changed situation as a widow.

2. Update your estate plans. Although you recently settled your husband’s estate, it’s now time to think of your own estate plans.

Before your spouse died, you might have had a simple “Honey, I love you” will that left everything to him. But now he’s gone. Consider how your money and possessions should be divided after you pass on.

Who gets what? You can specify what you want in your new legal will. Depending on your situation, you may also need a trust. Ask your advisors about this.

You’ll also want to create or update your living will. That document says what you do or do not want to be done for you medically, including life-prolonging treatments.

Also, give medical and financial power of attorney to someone you trust. This person will make financial and medical decisions if you’re not able to speak for yourself.

Designate beneficiaries on your life insurance policy and retirement accounts, such as your individual retirement account, where you can name direct beneficiaries.

Your husband was probably the beneficiary before, so you need to replace his name with another relative or friend. Remember to do the same with U.S. savings bonds you might own. You may also want to designate a favorite charitable organization as a partial beneficiary.

If you have minor children, consider the protection you’re leaving them, including insurance coverage. Also, designate who would be your children’s guardian and who should manage money for their care if you’re not available.

Thinking about your death isn’t easy, especially after facing your husband’s passing. Your end-of-life planning is a lasting gift for your loved ones. They’ll be grateful you are getting things organized rather than leaving a potential mess.

So, you may ask, how long does it take for a widow to move from grief to growth? It depends. A husband dying suddenly and unexpectedly is much different than an ailing spouse “living on borrowed time” for several years.

A widow’s age, her health, the level of family and community support she has, and any pre-planning done before her husband’s death will also impact her progress.

— By Kathleen M. Rehl, Ph.D., certified financial planner and author of “Moving Forward on Your Own: A Financial Guidebook for Widows.”

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