Boomer Widows are Financially at Risk

A friend shared a great article with us yesterday via Reuters.com called, ”Why Boomer Widows are Financially at Risk.” In the article, reporter Chris Taylor writes about a growing group he likes to call, “Boomer Widows,” women born during the Post WWII Baby Boom who have outlived their husbands and are now left to tackle financial matters alone. The article encompassed our mission to a T (be prepared for those 5 D’s!) so we attempted another infograph (see our first here) to conceptualize the information.

Why boomer widows are financially at risk

BY CHRIS TAYLOR

NEW YORK Fri Jan 20, 2012 12:02pm EST

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(Reuters) - In 2000, Carole Brody Fleet was part a group of one million people just like her. By 2006, she was one of two million. Over the next couple of decades, she'll become one of 20 million.

But it's a group she never wanted to be a part of.

She's a baby boomer widow, having lost her beloved husband Mike to Lou Gehrig's disease in 2000. It was an emotionally tumultuous time, when she felt utterly lost and "completely overwhelmed". But what hit her maybe most of all: The financial realities of facing life without her longtime partner.

"There were medical bills, there was a lack of financial preparedness, and there was the belief that bad things only happen to other people," says Fleet, 51, author of "Widows Wear Stilettos." "Combine all of that, and we were absolutely left in financial ruin."

It's a demographic phenomenon that financial planners are dealing with more and more. With life-expectancy rates being markedly different between the sexes - on average, women live five years longer than men - it means that waves of women among the 78-million-member boomer generation are finding themselves having to grapple with financial matters alone/

While not always the case - roughly 30 percent of the time, husbands will outlive their wives - the likelihood is that an overwhelming 70 percent of boomer women are expected to survive their husbands, and bear the resulting financial burdens.

"We're talking about a significant increase in boomer widows over the next 10 to 15 years," says Brian Korb, a wealth manager at USAA who did his doctoral dissertation on financial planning for boomer widows. "There are a couple of key issues: They won't have the assets they'll need to live, and many won't have any experience managing those assets."

Women have been taking major strides in making financial calls, boosting involvement in household decision-making by a third in the last decade, according to a study by Prudential Financial (link.reuters.com/mun26s). But even so, 40 percent of married women still leave retirement planning up to their spouse, according to an ING Direct USA survey - and almost 80 percent say they lack the financial savvy to make the right planning decisions (link.reuters.com/nun26s).

Future prospects for boomer widows aren't helped by Americans' woeful underfunding of their retirement accounts. According to the Employee Benefit Research Institute, 56 percent of workers report having less than $25,000 in savings and investments (link.reuters.com/pun26s). Subtract one spouse's income in the event of a death, while still coping with bills like mortgage payments, and the financial equation can be extremely frightening for the surviving partner.

Of course, you don't have to wait for such a crisis to take action. The steps you take now could spare you financial panic down the road:

* Start your estate planning yesterday. If a spouse's illness is drawn out, there might be ample time to get your family's financial affairs in order. But if the departure is sudden - a car accident or a heart attack, say - then you just don't have that time. Make sure all accounts are jointly held, for instance, so assets aren't walled off and subject to a lengthy probate process. "I know of one couple where the husband had a heart attack while packing for an anniversary cruise," says Korb. "The fact is you just don't know how long you have left, so get prepared now."

* Avoid the 'Shoebox Widow' syndrome. In couples where one partner handles all the financial affairs, the spouse left behind is frequently in the dark about their assets. "Often widows will be left with nothing but a shoebox or a grocery bag full of random statements," says Michael Mussio, a portfolio manager with FBB Capital Partners in Bethesda, Maryland. "Then they have to make sense of it all, which leads to even more anxiety." To prevent that outcome, get together with your spouse now to write down a full record of all accounts, passwords and contacts that will become vital later on.

* Hold off on Social Security. Even though you can start taking Social Security at age 62, it means a reduced benefit for the rest of your life. If a husband was the primarily earner over the course of his career, that reduced benefit passes to his widow. If the primary earner can afford to hold off on taking Social Security until as late as age 70, on the other hand, you qualify for a significant benefit premium that could help the surviving partner for years to come.

* Don't make hasty financial moves. With a hole in the heart after a spouse's passing, it's not the ideal time to be making critical financial decisions. Brian Korb's study of boomer widows found that many describe the experience as being in a permanent "fog," or akin to having had a stroke. As a result, "Don't make any major decisions inside of the first six months," advises Mussio. "As long as you have some savings or income to tide you over, don't move assets around at a breakneck speed. You're still suffering, and you're still grieving."

* Enlist the help of a professional. Nothing can replace a lost partner, of course. But when it comes to financial decisions, boomer widows can draw on the expertise of a professional to help navigate some tricky waters - ideally someone you already trust and have bonded with. In fact, among the boomer widows USAA's Brian Korb surveyed, their number-one regret was not going to a financial planner sooner.

As for Carole Brody Fleet, she's since rebounded from her personal loss and her precarious finances. Her new book, "Happily Even After," comes out this May, and she remarried back in 2009. But she remains determined to help those boomer widows who feel as terrified and lost as she once did.

"Boomer widows are financially unprepared in so many ways that it's frightening," says Fleet. "People running around without wills, without life insurance. They could lose everything, and it's because nobody is talking about these things. We think that if we just don't talk about it, it won't happen to us."

(The writer is a Reuters columnist. The opinions expressed are his own.)

(Editing by Jilian Mincer and Beth Pinsker Gladstone)