Focus on the Family

Widowed: Living Well in the Future

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Doubt about the future strikes every new widow and widower at a time when their security has been greatly shaken. Many fears and questions arise. Whether or not you’ll be able to live as well in the future is determined by three things: your income, expenses, and long-term needs.


Doubt about the future strikes every new widow and widower at a time when their security has been greatly shaken. Many fears and questions arise. If you’ve had no experience in managing money, even $1 million of life insurance may feel inadequate.

Realizing that God owns it all and provides all the resources you will need should help you overcome some of the fear.

Whether or not you’ll be able to live as well in the future is determined by three things: your income, expenses, and long-term needs. I know that when you prepare a financial plan, peace of mind results. It results from knowing either what steps you have to take to get your house in order or that you really are okay financially.


Here are three rules for preparing a financial plan: Keep it simple, keep it flexible, and make it yours and not someone else’s. These are the elements of a good financial plan: determine what you owe, what you own, what your income is, what your expenses are, what your long-term needs are, and the medical and liability insurance your circumstances dictate.

Your income may come from several sources. Life insurance proceeds can be taken either in a lump sum, which I generally recommend, or as a monthly income for the rest of your life. I have suggested that taking a pension payout is often better than taking a lump sum. That generally is true when a retiree has a spouse to consider, since a pension payout can provide income during the lives of both spouses.

As a widow(er), however, the life insurance payout is needed to provide income for you only. If you choose a lifetime payout and then die earlier than expected, little to none will be available for your heirs. The lump sum is also preferable because life insurance proceeds are often needed right away to pay for the funeral or final medical bills, or to pay off debt.

Furthermore, life insurance proceeds taken in a lump sum are tax free, while monthly payouts are partially taxable. By taking the money all at once and investing it yourself, you have more control over the results—and can provide a greater inheritance should you die relatively soon.

The second source of income is salaries and wages from either salary continuation plans your spouse may have had or, more likely, your own ability to work.

Your spouse’s former employers may have 401(k) plans or pension plans that will provide you either regular income or lump sum payments. Your age, the amount in the plan, and your needs will determine the best method to take those payments. Again, the lump sum option is generally preferable for the reasons given above.

Social Security may provide some benefits for the widow(er) who has children under the age of 18, as well as the surviving spouse over the age of 60. Your local Social Security office can answer questions about the benefits to which you’re entitled. How much you receive will depend on how much you and your spouse paid into the Social Security system.

Some of the less-obvious sources of income – fraternal organizations, unions, and perhaps the military – may also provide certain benefits.

Once you add up all the sources of income, you’ve completed the first significant step in determining whether you’ll be able to meet your needs and your children’s needs.


The second major step is to calculate what your expenses will be. That will take some time, as many things will be changing. Most couples assume that if they have an income of $40,000 and are saving no money, the spouse would continue to need $40,000 to maintain his or her lifestyle. That’s not the case. Expenses such as food, clothing, and transportation will likely go down. Other expenses, such as bills for home repair, lawn care, housekeeping, cooking, and other tasks done by your spouse may go up.

If you weren’t doing it before, you’ll now need to reconcile your monthly bank statements. In the process, you’ll be reviewing how you’re spending money, and you’ll have a greater sense of control over your financial situation. At first you may feel less secure because you understand better how much money is being spent, perhaps without the provision of regular income from your spouse. Over time, however, you should begin to feel more control and security.

Long-Term Needs

The third major factor determining your standard of living is your long-term major needs. Make a list of those needs, the dates when they’re needed, and the estimated amount that will be needed. Typical needs include college education for your kids, debt payoff, and lifestyle needs such as replacement of cars and home repairs. Committing the needs to paper will begin to give you a sense of control and security because you eliminate the anxiety of the unknown.

Life insurance also becomes a key consideration. If you’re a single parent and don’t have enough financial resources, it’s vital that you provide for your kids through insurance on your life. Life insurance may also be appropriate to meet estate tax needs. A competent financial advisor can help you determine whether you need it and, if so, how much coverage you should obtain.

The last issue affecting how well you’ll be able to live is the whole area of investments. Life insurance proceeds or investments your spouse left you may be your primary source of income. How much money is available to invest is extremely important to your long-term financial security. Always remember that every investment carries some risk. Generally speaking, the higher the rate of return you’re seeking, the greater risk you’re taking. You can minimize the risk in two ways. First, take a long-term perspective on your investing. Don’t try to get in and out of investments as markets change. Second, make sure your investments are well diversified so that when one goes down, as it most certainly will, others will provide stability.

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