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Losing a spouse

5 ways surviving spouses can adjust and avoid costly financial mistakes

by Alliance America
April 20, 2023


The death of a spouse can have a significant financial impact on the surviving husband or wife, who may need to adjust their budget and financial plans as they carry on without their partner.

One of the most significant financial impacts of losing a spouse is the reduction of Social Security income. Surviving spouses often fail to adjust their spending accordingly. Failure to adjust spending due to the loss of Social Security income can lead to significant financial difficulties, such as depleting savings, incurring debt or even bankruptcy. Surviving spouses must assess their expenses and income before making lifestyle changes that increase expenditures. Unfortunately, many widowed spouses make the mistake of not changing their spending based on their new circumstances – and that can lead to financial troubles.

One way surviving spouses fail to adjust their spending is by maintaining the same lifestyle they had before their spouse passed away. This includes continuing to live in a house that may be too large for their needs or continuing to spend money on expensive hobbies or vacations. If a couple used to embark on an expensive vacation every year, the surviving spouse may feel that they need to maintain that tradition even though it is no longer financially feasible.

Packing a moving box

Consider, for example, the case of Mary who lost her husband of 45 years. She continued to live in their large home, taking frequent vacations and going out to eat often. However, she did not adjust her spending to reflect the loss of her husband’s Social Security income. As a result, she quickly depleted her savings and was forced to sell her home and downsize to a smaller apartment.

The good news is that surviving spouses can reduce their spending by changing their lifestyles in a variety of ways. By downsizing their home, cutting back on dining out, reducing unnecessary expenses, shopping for better deals, taking advantage of senior discounts and considering part-time work, they can make a significant impact on their finances and improve their overall quality of life.

Here are five ways surviving spouses can cut back on their spending by changing their lifestyles:

Downsize the home

One of the most significant expenses for retirees is housing. Surviving spouses can save a substantial amount of money by downsizing to a smaller home or apartment. Not only will they save money on rent or mortgage payments, but they also will save on utilities, maintenance, insurance and property taxes. Selling a larger home can provide a significant amount of cash that can be invested or used to pay off debt. This can increase the surviving spouse's liquidity and financial flexibility. Plus, a smaller home is typically easier to maintain and requires less time and money for upkeep. This can be particularly helpful for older adults or those with limited mobility. Downsizing to a smaller home in a more urban or suburban area can provide greater access to amenities such as shops, restaurants and public transportation.

Make smart dining and food choices

Another way to reduce spending is to cut back on dining out. While it can be tempting to eat out frequently after losing a spouse, the costs can add up quickly. Cooking meals at home can be a more cost-effective option, and it can likewise be a therapeutic activity for those who enjoy cooking. Creating a weekly or monthly meal plan and grocery list can prevent overspending and reduce food waste. Planning meals in advance also allows for healthier and more varied food choices. Creating a weekly or monthly meal plan and grocery list can curb overspending and reduce food waste. Planning meals in advance also allows for healthier and more varied food choices. Many stores offer loyalty programs or discounts for seniors or military veterans. It's also worth considering generic or store-brand items, which are often cheaper than name-brand products. Frozen and canned foods are often cheaper than fresh produce and just as nutritious. Frozen fruits and vegetables are an excellent option for smoothies or stir-fries, and canned items such as beans and tomatoes can be used in a variety of recipes.

Reduce unnecessary expenses

Surviving spouses can also cut back on unnecessary and optional expenses, such as subscriptions, memberships and other recurring costs. They should review their expenses regularly to identify savings opportunities. Shopping for better deals is another way surviving spouses can save money. For example, they can look for sales and discounts when searching for groceries, clothing and other essentials. They can also compare prices online before making major purchases. The potential annual savings from shopping for better deals can vary depending on the person's spending habits and the types of items they purchase. However, it's safe to say that the potential savings can be significant. Many stores offer price-matching policies, so it's important to do research and find the best deal. Another way to save is to use coupons and promo codes to get discounts on purchases. You can sign up for email lists or loyalty programs to receive coupons or promo codes on a regular basis. Many businesses offer senior discounts for those aged 55 and older. Surviving spouses can take advantage of these discounts to save money on a variety of expenses, such as travel, dining and entertainment.

In addition, surviving spouses can consider buying used or refurbished items instead of new ones. This can be particularly beneficial when purchasing larger items like appliances or furniture. Used or refurbished items can often be found at a fraction of the cost of new ones.

Finally, it's imperative to make a shopping list and stick to it. This can help prevent impulse purchases and ensure that only necessary items are purchased. Additionally, waiting for sales or clearance events can also result in significant savings.

Consider part-time work

Working part-time

Surviving spouses who are able and interested in working can consider part-time work to supplement their income. This can be a great way to not only increase their income but also stay engaged and socially active. Part-time work can come in many forms, such as working in retail, hospitality or even as a consultant or freelancer. For example, a surviving spouse who has experience in accounting can work part-time as a consultant or freelancer, providing accounting services to small businesses. Similarly, a retired teacher can work part-time as a tutor or mentor to students.

Part-time work can also provide a sense of purpose and fulfillment for surviving spouses. It can help them maintain a routine and a sense of structure in their lives, which can be crucial during a difficult time. It can also offer opportunities to meet new people and build new relationships, which can be important for social support.

In addition to the financial benefits, part-time work can also provide a sense of accomplishment and self-worth. This can be especially important for those who have lost a spouse and may feel lost or uncertain about their future. By working part-time, surviving spouses can maintain their sense of independence and self-sufficiency, which can be crucial for their mental and emotional well-being.

However, it is important to note that part-time work may not be suitable for everyone, especially those who are dealing with health issues or other caregiving responsibilities. It is essential for surviving spouses to carefully consider their options and assess their capabilities before taking on part-time work.

Plan for the long term

Another common mistake is failing to plan for the long term. Surviving spouses may receive a lump sum of money from life insurance or other sources of income, and they may feel that this money will be enough to sustain them for the rest of their lives. However, they may not take into account inflation or other unforeseen expenses, which can quickly deplete their savings. Some surviving spouses may even fall prey to scams or fraudulent schemes that promise high returns on investments, leading to further financial losses.

Indeed, many surviving spouses may not fully understand their financial situation, particularly if their spouse was the primary breadwinner or handled the household finances. This lack of understanding can lead to poor financial decisions, such as taking out high-interest loans or making unnecessary purchases. Some may even feel guilty about spending money on themselves, leading them to avoid necessary expenses, such as health care or home repairs.

Relocating without considering nearby family members is another common mistake. It is crucial to consider the impact of nearby family members before making any relocation decisions. Failing to plan for long-term care can be expensive, and without a spouse or nearby family members to provide care, a surviving spouse may need long-term care sooner than they think.

Failing to plan for Medicaid can also be a mistake. Medicaid can be a valuable resource for paying for long-term care, but if a surviving spouse needs Medicaid and does not have a community spouse, their assets may be subject to estate recovery upon their death.

Surviving spouses should address estate planning and any looming probate issues. This can include paying off outstanding debts, distributing assets and updating legal documents such as wills and trusts. Widows and widowers should seek advice and assistance from financial professionals, attorneys and other experts to help navigate this difficult time.

Overall, surviving spouses face challenging and complex budgeting and financial planning adjustments after a spouse’s death. It is essential to assess expenses and income before making any lifestyle changes and to seek advice and assistance from financial professionals and other experts. Surviving spouses may also need to make adjustments to their social circle and health practices to ensure they are taking care of themselves during this difficult time.

In conclusion, the financial impact of losing a spouse can be devastating, and surviving spouses must take steps to adjust their spending accordingly. This includes reassessing their lifestyle and expenses, planning for the long-term and seeking professional financial advice if needed. By avoiding common mistakes, surviving spouses can ensure that they have the financial stability they need to move forward.

Alliance America can help

Alliance America is an insurance and financial services company dedicated to the art of personal financial planning. Our financial professionals can assist you in maximizing your retirement resources and achieving your future goals. We have access to an array of products and services, all focused on helping you enjoy the retirement lifestyle you want and deserve. You can request a no-cost, no-obligation consultation by calling (833) 219-6884 today.

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