Dear Joint Accounts,
My wife and I are both in our late sixties and retired. Our retirement income is close to six figures, with 80% of that being my income. Our house and cars are paid for. We have a comfortable amount of savings that we use only in emergencies.
The problem: When I pass, my wife won’t have much money coming in. My health isn’t great, and I know my wife will outlive me. We married later in life, and because of the way my retirement income is structured, she’s not entitled to it once I’m gone. She likes to spend, but because of the situation she’ll eventually find herself in, I’d prefer to save more aggressively. How can make sure she’ll be okay financially once she no longer has my income to rely on?
You’re smart to be concerned about your wife’s financial future. Many couples don’t even think about the inevitable, much less plan for it. And that’s understandable: Figuring out the probate process — what happens to the assets you leave behind — can be both an excruciating exercise in confronting your own mortality and a logistical slog.
But lack of planning can compound an already heartbreaking situation. Grieving is hard enough. Worrying about money at the same time is s a level of emotional exhaustion I wouldn’t wish on anyone.
Still, your goal right now should be to get to a place where you can stop worrying so much about the future and enjoy your life together in the present. If you haven’t done so already, schedule an appointment with a Certified Financial Planner familiar with the ins and outs of inheritance laws and estate planning. You’ll also want to retain a lawyer to help you create a will. Legal site Nolo has a quick checklist for getting this done.
You seem sure that your retirement income is structured so that she won’t get any benefits, but when you talk to a financial planner, make sure to ask about your options — your wife might be entitled to survivor benefits through your Social Security income, for example.
No matter what you find out, it’s important that you go and your wife navigate this process together. A CFP told me that too often, the newly widowed find themselves in the dark when it comes to finances: They don’t know what accounts exist or where passwords are kept. So keep a list of all of your account information, whether it’s an employer-sponsored pension or your own IRA. Include contact information for the firm that manages these accounts, too. Keep this information, along with a copy of your will, in a safe place. Make sure to include your wife in conversations with a financial planner.
Doing so will make it easier to find a middle ground between your concerns: You want to save for the future, she wants to enjoy the money now. In order to find a compromise, you should both have a straightforward understanding of what your income, spending, and expenses look like now, as well as what they’ll look like in the future.
To make it easier, you can use a tool like Vanguard’s retirement income calculator or the AARP’s Retirement Calculator. These calculators are meant for retirement planning, and yes, you’re already there, but they can also help you figure out how much of your current income you’ll need to save to supplement your wife’s future income.
Schedule time to sit down together and crunch some numbers. List all of your wife’s expected expenses after you pass in order to come up with an income goal for that time. Take turns talking about your spending priorities, whether they look more like taking a grand vacation every year or just being able to enjoy smaller little things, like restaurant meals. Maybe your wife is okay with deflating her lifestyle in the future so she can live it up with you right now. If that’s her preference, you should respect and consider it, too. The sooner you get the planning and budgeting over with, the sooner you can stop worrying about it and get back to enjoying your life together.