A lot of things change after the death of a spouse, and adjusting to a new income is no small task. Especially if your loved one was the primary breadwinner, your financial situation probably looks very different. To help ease the transition, let’s explore how to sort through your new income and financial standing, starting with making sure you’re receiving all the funds you’re entitled to.
When you’re getting a handle on your finances, it’s important to fully understand how much you have coming in. Along with looking into the worth of “static” assets like your home, explore recurring income sources like:
- Social Security benefits. If your spouse worked and earned an income, you’re likely eligible for Social Security benefits. Survivors can receive full benefits at full retirement age (get the details here) or reduced benefits at age 60. Contact the Social Security Administration for information and talk to a financial advisor about withdrawal strategies that make sense for you.
- Pension plans. If your spouse had a retirement pension plan, you may be eligible for survivor benefits now or when you retire. Contact their employer for details.
- Life insurance benefits. If your spouse had a life insurance policy (one they purchased via an employer or through a union), you’re likely entitled to the payout. You may receive a lump sum or have the option for regular installments.
- Income from leases. Are there outstanding rental agreements or land leases? Take some time to understand the terms and how much you’ll earn from them.
- Salary. If you already work, this one’s easy to figure in. If you’re starting a new job, looking at your other income sources that can help you understand whether you need to work full time or part time, what sort of salary to aim for, etc.
Once you know how much you’ll be receiving each month, you can start setting up your budget. Take a look at our blog, “Establishing a Budget: 8 Tips to Set and Achieve Your Budget Goals,” for a step-by-step guide for instituting a budget that works for you.
As you think through things like fixed and variable expenses, retirement savings, and emergency funds, it’s also a good time to check in with your spending. Does your current financial state call for some cutbacks? Or maybe it’s just time to evaluate your priorities. For example, if you’re living alone, you might consider moving to a smaller home in the future and adding more funds to your retirement savings if they seem a little low.
It’s also wise to make sure to stop payments to memberships your spouse used but that you don’t need. For example, is there a gym or golf membership that needs to be canceled? How about magazine subscriptions or cell phone contracts? It may take some time to sort through everything, but it’s an important step in taking control of your finances.
In the end, you’ll have a comprehensive understanding of what’s coming in, what’s going out, and where you’re headed long-term.
Need more help sorting through your finances after losing a spouse? Our ebook, “What to Do When Your Spouse Dies,” can guide you through the process. Or feel free to reach out—we’re always here to help.