Preparing for Lost Income

We would all agree that losing a spouse is a traumatic experience. In all honesty, it is probably one of the worst things we have to go through in life. The grieving process takes time and, depending on how prepared you were, difficult decisions must be made. Of course, there are immediate decisions such as what type of funeral or service to have. Or perhaps what to do with the additional vehicle or other assets that may not be used any longer.

Unfortunately, when your spouse passes there WILL be a loss of income. When we are discussing social security benefits, the surviving spouse keeps the larger of the two checks. Many times this creates an immediate deficit in the budget by hundreds, if not thousands of dollars. If the recently departed were receiving a pension through their former employer, there is a good possibility that there will be a reduction or elimination of those benefits.

With this in mind, when preparing for your final expenses it is best to factor in a time frame of adjustment. Let’s take a look at an example.

Bob and Sally have been happily married for 57 years. They enjoyed their lives during retirement until Bob was diagnosed with prostate cancer. Bob and Sally have been able to make ends meet, but not really put away any substantial savings between social security and Bob’s pension. When Bob retired, he elected for a larger pension check leaving half of the benefit to Sally. To date their monthly income has been as follows:

  • Bob’s Pension – $2200
  • Bob’s Social Security – $1400
  • Sally’s Social Security – $1100
  • Total in Savings – $18,000

The total income of $4700 monthly has afforded them an opportunity to travel and enjoy their retirement. Unfortunately, Sally is going to be left with a difficult situation because her income is going to change drastically. After Bob’s death, here is what her income looks like:

  • Bob’s Pension – $1100 (half of what it was)
  • Bob’s Social Security – $1400
  • Sally’s Social Security – $0 (she will recieve Bob’s)
  • Total in Savings – $3000 – the funeral cost $15,000

Sally went from having $4700 monthly to $2500 monthly. Additionally, her savings were nearly depleted to cover the funeral. And sadly, all of this could have been avoided had Bob adequately prepared for his passing.

A final expense policy should consider more than just the funeral expense. And the perfect time to begin a policy is when you first retire – when you are younger and healthier. With a proper plan, Sally’s savings would have remained intact, and she would have had six months to a year to make the lifestyle changes needed to accommodate the new budget.

Bell Benefits Group specializes in helping retirees find adequate coverage at an affordable price. We are here to listen, educate, advise, and serve you in all of your needs.