The recent death of the husband of 45- year old Facebook Chief Operating Officer Sheryl Sandberg reminded us that young women can unexpectedly become widowed. There are approximately 29,000 women under the age of 49 and living in the United States who can claim the same misfortune every year. This number increases twenty-five fold when we look at the total number of widows in the United States. According to the U.S. Census Bureau 800,000 people are widowed each year in the United States. Nearly 700,000 women lose their husbands each year and will be widows for an average of 14 years[1].
Add to this the depressing trend that female survivors outdistance their male counterparts by a continually widening margin and have now come to represent approximately 80 percent of the widowed population in the United States. This ratio is expected to widen even more in the future. There are several factors for this imbalanced gender ratio among the widowed. Women experience greater longevity than men. First, because their death rate is lower than men's, a larger numbers of women survive into advanced years. Second, wives are generally younger than their husbands, a fact that increases their probability of surviving their spouses even without the differences in longevity. Third, among the widowed, remarriage rates are significantly lower for women than men. Therefore, many men leave widower status by marrying again, whereas most women do not, thereby adding to the surplus of female survivors.
Also unlike Sheryl Sandberg, many of these women have to bear the added struggle of overcoming a significant financial burden that is thrust upon them due to the sudden and unexpected loss of their partner. On average 75% of the survivor’s support base is lost following the loss of a spouse or significant other, which includes loss of valuable support from family and friends. But for now let’s focus solely on the financial struggle. How can the financial burden be eased after the loss of a spouse? Three important strategies come to mind to most immediately: Life Insurance, Social Security, and Personal Savings and Investment.
Various forms of Life Insurance can provide the protection against the loss of income that would result if the insured passed away. The named beneficiary receives the proceeds and is thereby safeguarded from the financial impact of the death of the insured. In a recent LIMRA study, 70 percent of U.S. households with children under 18 would have trouble meeting everyday living expenses within a few months if a primary wage earner were to die today[2]. Do you have adequate Life Insurance Coverage?
How about Social Security? As the original program was named (Old Age Survivors and Disability Insurance) the benefits don’t go into effect until a certain age. Surviving spouses receive nothing in the way of death benefits until they reach the age of 60. Also Social Security death benefits only cover children up to age 18. After that, these kids are "on their own." Here too many factors will determine the size of possible benefit, including your spouse’s age at death, your current age, your full retirement age, and your spouse’s full retirement age. Other benefit terms are governed by disability and the existence of dependents. One Social Security Administration report shows that “for the past thirty or more years the rate of poverty among elderly widows is consistently three to four times higher than elderly married women.[3]” Knowing your spousal rights and benefits is an important step and can make a significant difference in your future income and peace of mind. How about savings and investment? Do you have a sound savings and investment plan that meets your unique needs and these unforeseen circumstances? Are you prepared to make complex decisions?
Additional Reading: The Economic Consequences of a Husband’s Death: Evidence from HRS and AHEAD
~ Anita Srivastava is a Wealth Advisor with Morgan Stanley Global Wealth Management in Ridgewood. The information contained in this article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives.
[1] U.S. Bureau of the Census (1999).
[2] LIMRA Household Trends in U.S. Life Insurance Ownership, 2010.
[3] (SSA, 2005)