Posts Tagged "widows"

Photo of lonely elderly woman

Widows: Manage Your Grief, Finances

Kathleen Rehl’s husband died in February 2007, two months after his cancer diagnosis. She has taken on the mission of helping other widows process their grief, while they slowly assume the new financial responsibilities of widowhood. Rehl, who is 72, is a former financial planner, speaker, and author of “Moving Forward on Your Own: A Financial Guidebook for Widows.” She explains the three stages of widowhood – and advises women to take each stage at their own pace.

Question: Why focus on widows?

Rehl: After a husband dies, and whether it’s unexpected or a long-lingering death, there is a numb period. Some widows refer to it as “my jello brain” or “my widow’s brain.” It’s a result of how the body processes grief. The broken heart syndrome is actually real. After a death, the immune system is compromised, and chronic inflammation can happen. It’s hard to sleep at night and there can be digestive difficulties. Memory can be short, attention spans weakened, and thinking downright difficult. You’ve got this grief, and yet the widow might think, “What do I have to do?” The best thing she can do initially is nothing.

Q: Why nothing?

Rehl: I talk about the three stages of widowhood: grief, growth, grace. At first, she’s so vulnerable that if she’s making irrevocable decisions immediately, they may not be in her best interest. The only immediate things she might need to do are file for benefits like Social Security and life insurance and make sure the bills are still being paid.  All widows need to take care of these essential financial matters. But major decisions should be delayed. I knew one widow whose son said, “Move in with us.” That would’ve been a really bad decision, because she didn’t get along with the daughter-in-law, and it would’ve introduced another type of grief – loss of place, loss of friends. Then her son got a job in Silicon Valley and moved away.

Or a widow deposits her life insurance in the bank, and a helpful teller says, “I think Fred in our wealth management department down the hall can see you because you need to do something with your money.” Fred sells her a financial product she doesn’t understand, and two or three months later, when she’s coming out of her grief, she thinks, “What did I buy?” One widow came to me who had locked her money into a deferred annuity that wasn’t going to pay out for years, and she needed the money now.

Q: With most women working today, aren’t they better equipped than previous generations of widows to handle the finances? Learn More

Picture of an elderly woman

Husbands Ignore Future Widow’s Needs

The amount of money a widow receives from Social Security can mean the difference between comfort and hardship.

Husbands have a lot of control over how this will turn out. Each additional year they postpone collecting their own Social Security adds another 7.3 percent to the amount a future widow will receive every month from the program’s survivor benefit.

But husbands can be a stubborn lot.

Previous research has shown that a large minority fail to take their wives into account when deciding to start their Social Security. A new study confirms this in an online experiment designed to raise husbands’ awareness of the financial impact their claiming age could have on a spouse. The men’s ages ranged from 45 to 62.

In the experiment, the researchers displayed Social Security’s benefit information to the men three different ways. In the first format, a control group saw the basic information: the husband’s full retirement benefit, and then a link to a second page displaying his benefits for various claiming ages. A second format also displayed his full benefit, but the link went to a page with estimates of his widow’s survivor benefits, based on the husband’s various claiming ages – the later he files, the more she would receive. The third format had the same information as the second format, but it was presented on a single web page.

Regardless of the way the survivor benefits were displayed, the men weren’t persuaded to postpone their own benefits to one day help their widows. Potential explanations include their feelings about work, existing health issues, and whether they will get a defined benefit pension from an employer.

Whatever their motivation, simply educating husbands on the financial impact of choosing a claiming age “is unlikely to improve widows’ economic outcomes,” concluded the study by the Center for Retirement Research at Boston College.

The impact of widowhood is often significant. An average widow’s total income drops 35 percent when a husband passes away, the researchers estimated from financial data for married men who had retired. The earlier the husband had started his benefits, the larger the drop in the widow’s income after the couple’s second Social Security check stops coming in. …Learn More

Social Security cards

Tweaking Social Security for the Future

Social Security remains as vital today as it was after its 1935 passage. But advocates for the nation’s most vulnerable retirees have proposed ways to enhance their benefits.

Consider the minimum benefit. Put on the books in the early 1970s, its goal was to prevent poverty among retirees who had worked for decades in low-paying jobs. The benefit’s value has diminished due to a design flaw that rendered it largely ineffective.

A recent policy brief by the Center for Retirement Research analyzed various modest proposals to increase the minimum benefit and improve low-income retirees’ financial security.

This brief was the last in a series on modernizing Social Security. The relatively low cost of these proposals, many of which have bipartisan support, could be offset by benefit reductions for less-vulnerable retirees. The House of Representatives is planning hearings later this year looking into ways benefits might be enhanced.

The following are synopses of the policy problems and proposals discussed in the other briefs and covered in previous blogs: …Learn More

counting change

Reducing Poverty for Our Oldest Retirees

With more Americans today living into their 80s and beyond, the elderly are becoming more vulnerable to slipping into poverty.

To reduce the poverty risk facing the oldest retirees, some policy experts have proposed increasing Social Security benefits for everyone at age 85. Under one common proposal analyzed by the Center for Retirement Research in a new report, the current benefit at this age would increase by
5 percent.

The poverty rate for people over 85 is 12 percent, compared with 8 percent for new retirees. But more elderly people may actually be living on the edge, because the income levels that define poverty for them are so low: less than $11,757 for a single person and less than $14,817 for couples.

age and poverty chartOne reason the oldest retirees are especially vulnerable is that their medical expenses are rising as their health is deteriorating, yet they’re too old to defray the expense by working. This is occurring at the same time that the value of their employer pensions – if they have one – has been severely eroded by inflation after many years of retirement.

Further, elderly women are more likely to be poor than men, because wives usually outlive their husbands, which triggers a big drop in income that is generally not fully offset by a drop in their expenses.

Limiting the 5 percent benefit increase to the oldest retirees would ease poverty while containing the cost. …Learn More

Senior Housing Shortage is Getting Worse

Nearly 10 million seniors are having difficulty paying for housing – and the problem is growing.

Housing experts typically recommend that people keep their housing costs below a third of their income. But one in three Americans over age 65 are spending more than that on their rent or  mortgage payment, utilities, property insurance, maintenance, and other housing costs, according to a new study, “Housing America’s Older Adults,” by Harvard’s Joint Center for Housing Studies.

costburdensover65If the senior housing problem hasn’t reached crisis proportions yet, Jennifer Molinsky, who wrote the center’s report, predicted that it will if nothing is done to increase the supply of housing structures that are both affordable and age-friendly to meet the needs of aging baby boomers. The number of households over 80 will more than double over the next 20 years, the housing center estimates.

“Unless we create more options for people at the middle- and lower-income levels, we are going to be seeing that people have fewer choices and that they’re forced into options they don’t want,” she said. …Learn More

Woman looking at mountains

A Proposal to Reduce Widows’ Poverty

A dramatic decline in widow’s poverty over a quarter century has been a positive outcome of more women going to college and moving into the labor force.

Bar graph showing percentage of povertyYet 15 percent of widows are still poor – three times the poverty rate for married women.

A new study by the Center for Retirement Research takes a fresh look at Social Security’s widow benefits and finds that increasing them “could be a well-targeted way” to further reduce poverty.

Widows are vulnerable to being poor for several reasons. The main reason is that the income coming into a household declines when the husband dies.  The number of Social Security checks drops from two to one, and any employer pension the husband received is reduced, or even eliminated if the couple didn’t opt for the pension’s joint-and-survivor annuity.

While one person can live more cheaply than two, the drop in income for new widows often isn’t accompanied by a commensurate drop in expenses.

Another issue begins to develop as much as 10 years before a husband dies. Prior to his death, his declining health may increase the couple’s medical expenses and reduce his ability to work, depleting the couple’s – and ultimately the widow’s – resources.

The irony today for wives who worked is that their decades in the labor force generally improve their financial prospects when they become widowed. Yet, under Social Security’s longstanding design, they receive less generous benefits than housewives – relative to the household’s benefits prior to the husband’s death. …Learn More

Boston or Florida?

Retire in Boston or in Naples, Florida?

My husband is newly retired, and we’ve spent hours talking about where we might want to live after I retire in a few years. Our imagined scenarios are always changing.

But I’m clear on one thing: I do not want to buy a house in Naples, Florida, where a couple we know did recently. No offense to Naples, which has lots to recommend it – no shoveling! But the typical resident is 65 years old. In fact, Naples is older than the state of Florida, where retirement communities are so pervasive that they distinguish between the “young-old” (ages 60-75) and the “old-old” (over 75).

Boston, where my husband and I live now, couldn’t be more different. It is swarming with college students and young people, including his two sons and daughter-in-law. Boston’s young people work in rapidly changing industries like high-tech or environmental engineering, and I like it that way. Boston’s median age is 32 – half of Naples.

As I get closer to retiring and am faced with change, I think to myself, “Who wants to live in the midst of a bunch of old people like me?”

But that’s precisely what many retirees do. There are many examples of cities that have moved dramatically in the direction of one or the other extremes – Boston or Naples; Madison, Wisconsin, or Scottsdale, Arizona. The Wall Street Journal reported that new retirement communities are popping up in places that weren’t traditional resting places for snowbirds: retired baby boomers’ net migration to the Appalachian region where Georgia, North Carolina, and Tennessee converge has quadrupled since 2011.

This age segregation is a relatively new area of interest to demographers. Almost 60 percent of the neighborhoods and other subdivisions within U.S. counties have moderate or high levels of segregation, which is similar in degree to the level of segregation between the U.S. Hispanic and white populations, Richelle Winkler found in a 2013 study of federal Census data.

Age segregation also occurs in rural areas, as younger people leave for jobs and older people move in. In some rural parts of the Great Plains, Winkler writes, there are two times more seniors than young adults. …Learn More

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