Suddenly Widowed? Take These 5 Steps to Help Manage Your Money

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  • Don't rush into any major financial decisions and take time to grieve -- this will help prevent making any rash or emotional moves.
  • Prioritize decisions based on urgency and then make an inventory of all your remaining assets and liabilities.
  • Collect any life insurance benefits and apply for Social Security benefits you qualify for.

Don't make this mistake if you are recently widowed.

Losing a beloved partner can lead to tremendous financial stress. According to the U.S Census Bureau, more than 15 million Americans are dealing with this unfortunate circumstance. For those over 75 years old, there are twice as many women (58%) than men (28%) affected. To aid in this difficult process, here are five steps to help you get your finances in order.

1. Take the time to grieve and process your emotions

Although managing money is important, don't forget that there is a grieving process you must go through as well. Allow yourself the time and space to grieve without feeling guilty or pressured. Don't make the mistake of rushing any decisions or hoping it will all go away.

Following the death of your spouse, it can be difficult to know where to start and what decisions need urgent attention. Gather some support from friends and family who are willing to help you. Break down all the tasks into manageable parts that require varying levels of priority -- such as setting up funeral arrangements or taking care of bills that are due immediately.

It is also essential for survivors to contact the Social Security Administration (SSA) in order to retitle any assets. Funeral homes take on this responsibility, but you should double check it just to be sure. Take enough time to recover before making any big financial decisions that are not urgent.

2. Make an inventory of all assets, liabilities, and bills

The next step is to collect all your financial documents. Start by taking inventory of your late spouse's assets, such as money, retirement accounts, and insurance plans, as well as estate-planning documents. Take stock of any outstanding debts you are responsible for as well. In addition, organize all your bills that you must pay. If your spouse handled all of the bills, it is important you can pick up where he or she left off. Make a list of all utilities, mortgage or rent payments, credit card payments, loans, and any other bills.

Create a new budget so you know how much you can spend moving forward. If your income has decreased, you may have to readjust your spending or start drawing from retirement accounts. For your retirement snapshot, calculate your updated net worth. This will help you get an accurate picture of your finances and how you'll pay for your needs going forward.

3. Collect life insurance benefits and apply for benefits

If your spouse had a life insurance policy, make sure to contact the insurer and begin the process of collecting benefits owed to you. Notify the SSA to receive a one-time lump-sum death payment of $255 if you were living with your late spouse. If you are the widow or widower of a person who qualified for Social Security, you can receive reduced benefits as early as age 60. If you qualify for Social Security on your own, you can switch to your own benefits at age 62. You can also receive benefits as early as age 50 if you have a disability and the disability started before or within seven years of your spouse's death.

If you have not remarried and you take care of your late spouse's child who is disabled or under the age of 16, then you can receive benefits at any age. If you already receive benefits as a spouse, your benefit will automatically convert to survivors benefits after the SSA receives the report of your spouse's death. You will need to make an appointment at your local Social Security office to apply for survivors benefits.

4. Check accounts and update beneficiary designations

Review all the bank and investment accounts to make sure everything is in order, and update the beneficiary designations accordingly. Contact any financial and investment firms to have any joint accounts retitled. You may want to keep some accounts open and in the name of your late spouse if you'll be receiving money in that name. Whenever you are talking with financial companies, the SSA, or other service providers, keep detailed notes with case numbers, account numbers, and other details for future reference.

5. Consider hiring a financial advisor

A financial advisor can help you make informed decisions about how to manage your finances going forward. If your spouse handled the household finances, then you may need some additional help. An advisor can also help walk you through the difficult transition and provide guidance for investments, taxes, estate planning, retirement savings, and more. Be careful that you don't fall to many scams out there that try to take advantage of those recently widowed.

Following these steps can help you transition into widowhood easier by making sure your finances are in order before moving forward. It can take some time to adjust after such a major life event, but taking it one step at a time will help you get through this difficult period. With patience and care, you will be able to move on with your life with clarity and stability.

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