Widowhood & financial planning
With most women outliving their husbands who often are the ones taking care of the finances, here are some important points to note so you can be more aware of the finances.
BY: Esther Seo
On average, most women will outlive their husbands by as much as a decade and usually more. According to figures by WINGS (Women’s Initiative for Ageing Successfully), 30 percent of women aged 60 to 69 are widowed. From ages 70 to 79 years of age, 60 percent of the women are widowed and figure rises to 80 percent for women over the age of 80. This all means that there will be many women who will have to fend for themselves after losing their spouses. While talking about death is considered taboo, let alone preparing for it, in reality, basic steps can be taken to help women cope financially after the loss of loved ones.
Before – be in the know
While most women are happy to let their husbands take care of the household finances, it is important to be involved so that you are not caught unaware if you are left to take up the financial responsibilities.
• Have a discussion with your husband about what will happen to the family financially if he is not around. Talk about various end-of-life scenarios and what the preferred course of action should be – having the discussion now will allow decisions to be made in a rational manner when the situation arises. While it is a difficult topic to bring up, not having the conversation can cause a lot of anxiety to the surviving wife. Be aware of plans for future financial needs like funding the children’s university education or your retirement nest-egg. Take an active interest in how much money is coming in and going out each month and where it is going.
• Compile a detailed list of all financial information like bank account numbers, investment accounts, insurance policies and file it together with important documents like Wills, deed to the house, marriage certificates and birth certificates. Make sure that both of you have proper Wills to ensure that there will be smooth distribution of assets. Get to know all the professional people that you will need to deal with such as lawyers, accountants, financial planners, and so on, and be aware of their names and contact information.
• Make sure that your husband has the proper life insurance in place to ensure that the family’s standard of living can be maintained even if he’s not around. There should be mortgage insurance in place for the outstanding mortgage on the home, as well as term insurance to cover survivor’s expenses as well as the children’s future university education. Also ensure that the family is covered with comprehensive hospitalisation insurance – many people depend on their husband’s company insurance to provide this coverage and this will disappear if he passes away.
• It is prudent to set aside three to six months of living expenses as an emergency fund. This fund can also help to pay for final arrangements as well as provide liquidity to tide the family over while the estate is being settled.
After – take control
• Take time to grieve before making any major decisions (like selling your house, for example) if they can be postponed. When you are ready, start by consolidating all the assets and debts to have an idea of where you stand financially. If there are substantial proceeds from your husband’s insurance policies, do not succumb to pressure to invest it immediately. Track your budget and after six months or so, you should have a better idea of what your living expenses are like and how much you will need to plan for going forward.
• It may all seem overwhelming and fear may be paralysing, but take it step by step, and realise that you are responsible for yourself and take control of your finances. Don’t be afraid to ask for help when you need it. Work with a certified financial planner to map out your financial future. Get your adult child, trusted relative or friend to go with you for the first meeting, to get a second opinion on the financial planner. Make sure that the adviser listens and really understands your needs, and isn’t focusing on trying to sell you products that you don’t need and may not be suitable to you.
By being prepared and having a contingency plan in place well ahead of time, you can avoid the additional stress of dealing with financial matters during the difficult time of grieving.
** This article is contributed by Esther Seo, associate adviser and a licensed financial adviser representative with ipac financial planning Singapore private limited, which is licensed with the MAS, Financial Adviser’s Licence No FA100003-3. For more information, please e-mail: email@example.com.
In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any person. Before making an investment decision, you should speak to a financial adviser to consider whether this information is appropriate to your needs, objectives and circumstances.
** For another interesting article by ipac on investing, check it out here.
(PHOTO ABOVE BY: bjearwicke/stock.xchng)