Figuring Out Finances After Loss
Jul 15, 2018
Though my memoir, Reclaiming Joy, addresses all aspects of grief—emotional, physical, social, spiritual and financial—I rarely blog about the financial challenges we face when we find ourselves suddenly single, whether by death or divorce. However, the headline of a recent Next Avenue post caught my eye:
Younger divorced women repeatedly tell me that I describe them when I write about coping with grief and remaking myself after the loss of my husband. They say, I experienced the death of hopes and dreams and plans for the future. In many ways, their losses are greater than mine. Eventually, most widows have some degree of closure, but the divorced spouse is still there. Widows lose some couple friends; but in a divorce, friends and even family take sides.
The same is true of finances. Shockingly, 40 percent of widows are said to fall below the poverty line within five years, often due to ignorance and poor management. We, like the divorced, must learn how to pick up the financial pieces after our loss.
Chuck Jaffe, a personal finance columnist, writes in “Picking Up the Pieces…” that retirement readiness is the key and must be addressed when our life circumstances change:
“In 2012, Fidelity Investments released compelling research showing that employees need eight times their ending salary to meet basic retirement income needs. Moreover, Fidelity set up checkpoints, markers on the road of life where someone might want to measure their progress toward the ultimate goal, for replacing 85 percent of pre-retirement income.
“The idea is that to reach the target, a worker should save about one times his or her salary by age 35, three times his or her pay by 45 and five times the salary by 55. There were some caveats and conditions to the research—Fidelity assumed someone would live to be 92, for example—but the numbers stuck with me because the investment company said the final goal included all savings and not just the dollars set aside in a workplace program like a 401(k).”
After Earned Income Stops
Perhaps like me, you were a stay-at-home wife, your husband had a business, you’re past 65. Retirement isn’t the issue. Or so you think. Instead, think of “retirement” as the number of years you expect to live after earned income stops. Look at your parents, grandparents, aunts and uncles. Which relative lived the longest? If you live to that age, how many years do you have in front of you?
I faced the possibility of 38 years as a widow, a realization that scared me to death and motivated me:
- To understand finances and Lev’s business interests;
- To take care of myself physically in order to have a decent quality of life in advanced old age; and
- To reinvent myself and rebuild my life.
Too many years lay in front of me for me to sit in a rocking chair and live with my memories.
You can read the gory details of my struggle to manage my finances here:
I have a simple answer to this last question, and it is a very conservative answer. My professional advisors—the bankers, accountants and lawyers I had to learn to listen to and work with—agree that if I spend more than 4 percent of savings each year, I will run the risk of depleting my funds within 20 years. I am on a budget, because that risk, however small, is not a risk I am willing to take.
As Helen, my mother-in-law and role model for widowhood, once said, “I started marriage in an apartment over a grocery store in 1932. I do not intend to end my life in the same way.”
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Truett Seminary, the Law School, the Diana R. Garland School of Social Work and the Journalism, Public Relations, and New Media Department are joining with the Baylor University Libraries at 3:30 p.m., Friday, September 14, for the official launch of Reclaiming Joy: A Primer for Widows at Moody Library 104, Baylor University, Waco, TX. You can preorder my memoir, published by 1845 Books, an imprint of the Baylor University Press, here.