‚ÄčNEFE’s My Retirement Paycheck will be retiring on Dec. 30, 2019. For more resources and tools, visit www.smartaboutmoney.org.

A retirement paycheck is a practical way to think about how you will pay yourself during your retirement years.

Click below to learn how each factor works together to optimize your retirement paycheck.

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Minimizing the Financial Impact of Losing a Spouse

Losing a spouse is always a painful and difficult event. And for retirees caught financially unprepared, it can be especially devastating. How do you plan for such a loss, and what do you do if you are in the midst of dealing with this crisis right now?

Get Organized

Organize and centralize all of your financial records so they are accessible to both of you. Discuss your preferences for sharing information about online accounts, keeping security considerations in mind.

Share Information

Make sure both of you are fully informed about all of your retirement resources, such as Social Security benefits, IRAs, pensions and any employer retirement benefits. Make sure both of you understand your basic estate planning documents, including your wills, powers of attorney for health care, and living will.

Budget for One Income

In addition to planning for retirement with income and benefits from both spouses, consider what will happen if one spouse dies soon after retirement. Plan a budget based on one income to be prepared.

Consider Working Longer

Delaying Social Security benefits for whoever makes the higher income often can be a good strategy for increasing retirement income. If the higher-earning spouse passes away, the surviving spouse can claim those benefits as if they were his or her own.

Take a look at this example:

Assume Robert will be 62 this year, and thus eligible to start taking his Social Security retirement benefits. If he starts taking his benefits at age 62, he will receive about $12,000 each year. If he waits until he reaches age 66 (his full retirement age), he will receive about $17,000 each year. But if he waits until he reaches age 70 in 2020, he will enjoy benefits of almost $24,000 per year, nearly double the amount he will receive if he starts taking benefits at age 62.

Assume Robert’s wife, Sally, has lower Social Security benefits of $10,000 each year. If Robert starts his benefits at age 62 and then passes away, Sally can switch to Robert’s higher benefits (an extra $2,000 each year) and receive that for the rest of her life. If Robert waits to claim Social Security until age 70 and then passes away, Sally could switch to his benefits of almost $24,000 — an annual increase of nearly $14,000 over her own benefits.

Review Insurance Policies

It’s important for you to make careful decisions about insurance to minimize the impact of your spouse’s death. For many couples, a joint life annuity payment option will work better than a single life option. The monthly benefit amount for the joint life option will be lower, but it will be guaranteed to pay until the surviving spouse passes away. In addition, given the high cost of nursing care, it may be wise to purchase a long-term care insurance policy, especially for women. (Because women are likely to live longer than men, they are more likely to need some advanced medical care at a point in their life when they may be on their own.) One alternative to long-term care insurance may be to purchase life insurance and have the survivor earmark a portion of those benefits for long-term care and medical expenses.

My spouse has passed, where do I begin?

After losing your spouse, take the following steps:

  • Revise your estate planning and all property and other legal documents to remove your deceased spouse.
  • Review all of your beneficiary designation forms on life insurance policies, retirement savings plans and other important documents.
  • Adjust your living expenses.
  • Apply for any benefits you may be entitled to, such as pension survivor benefits, life insurance benefits, or your former spouse’s higher Social Security benefit.
  • Cancel the deceased's credit cards.

Take your time on making any big financial decisions, such as selling a house or investing a life insurance benefit. If you remarry, be sure to review all of the above items to reflect your new marital status.