How to protect finances if you're widowed

Here are 6 important steps to help protect your personal finances.

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Key takeaways

  • Change the ownership registration on financial accounts.
  • Make sure the required minimum distribution is not due on any inherited retirement accounts.
  • Keep your insurance coverage up to date.
  • Investigate the Social Security benefits you are entitled to receive.
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Losing a spouse can be emotionally devastating, and is often a difficult time in which to make important life decisions. Yet it's typically when many financial matters require your immediate attention—such as handling retirement assets, learning to budget on one income, making sure you're properly insured, or figuring out your Social Security benefits.

To help avoid making emotionally driven—and potentially harmful—financial decisions, it's important to be prepared should you find yourself suddenly single. Here are 6 important action steps that can help protect your personal finances.

1. Update your financial accounts

When you lose a spouse, you'll likely need to change the registrations on any financial accounts that are owned jointly into your own name. Such ownership changes typically require you to provide your financial institutions with copies of your spouse's death certificate.

2. Divide or roll over retirement assets

Pension and retirement account assets have their own set of rules when it comes to shifting ownership from one spouse to the other.

Generally, upon the death of the account owner, retirement account assets pass directly to the beneficiaries (often the spouse, for those who were married) designated on the account. This is why keeping your beneficiary designations up to date on all retirement accounts—such as 401(k)s, 403(b)s, and IRAs—is critical. Even if your will makes provisions for your retirement assets, your beneficiary designations supersede them.

As for IRAs, the surviving spouse is usually entitled to their spouse's IRA assets. If you inherit your spouse's IRA and roll it over into your own IRA, you must start taking required minimum distributions (RMDs) from the account when you turn 73.1 You could face a 10% early withdrawal penalty if you take out money before age 59½. Rolling your spouse's IRA into your own might be a good option if you're not yet 73 and your spouse was, and you want to keep the money growing tax-deferred as long as possible.

Alternatively, you could roll the money into an inherited IRA and avoid the 10% early withdrawal penalty if you are younger than age 59½. The timing of RMDs will be determined by your spouse's age at time of death.

Visit Fidelity Life Events Losing a Loved One if you are the surviving spouse of an IRA owner.

3. Adjust your income and budget

Chances are, when you're suddenly single, you may be taking a cut in your income, so you may need to adjust your budget accordingly. Start by listing your essential expenses (housing, food, insurance, transportation, etc.) and your discretionary expenses (dinners out, vacations, clothing, etc.). Try to match reliable sources of income (salary, Social Security, pension, etc.) to your essential expenses and see where you might trim your discretionary spending. Create a budget with our Budget Checkup.

If you're near retirement or are already retired and fear an income shortfall, you might consider creating a guaranteed source of income by purchasing an income annuity.2 These products can turn a portion of your retirement savings into a source of reliable income that you can't outlive.

4. Evaluate your insurance needs

What you'll have and what you'll need for insurance can change dramatically when you lose a spouse. It's important to take a careful look at all the different types of insurance that are available, to see where you may need to adjust your coverage. Be sure to review:

If you are the surviving spouse and the beneficiary on your deceased spouse's life insurance policy, you will typically receive the proceeds tax free. But if you are still caring for children, you may want to either purchase or increase your own life insurance coverage to make sure they will be protected in the event of your death.

Even if your spouse carried your family's health insurance coverage, you can continue to maintain it for a period of time after becoming widowed.

Through the Consolidated Omnibus Budget Reconciliation Act (COBRA), if you're going to lose health benefits because of the death of a spouse, you can continue coverage for up to 36 months—so long as you pay the premiums, which can be up to 102% of the cost of the plan.

Because COBRA coverage is expensive in many cases and doesn't last indefinitely, you may want to check out other insurance options, whether through your own employer or by evaluating individual plans available through the Affordable Care Act (ACA).

We all hope we will never need it, but disability insurance is one of the least understood and most useful ways of protecting ourselves and our loved ones. What if you were injured or sick and couldn't go to work? Disability insurance, which is often offered through an employer or can be purchased on the private market, is designed to protect you and your loved ones against lost income.

Long-term care
If you're in your 50s or older, you may want to consider buying long-term care insurance to help keep potential costs of nursing home stays and home health care from depleting your income resources if you become seriously ill or injured.

Read Viewpoints on Long-term care: options and considerations.

5. Review your credit

When you're suddenly single, your credit can be among your most valuable assets—so protect it wisely. After the death of a spouse, you may want to request a copy of your credit report to take inventory of all the accounts that are open in your name and/or jointly with your former spouse. You can request a free copy of each of your 3 reports once a year at

Be sure to contact all 3 credit bureaus (Experian, Equifax, and TransUnion) to let them know that your spouse has passed away, to keep others from falsely establishing credit in their name.

Unfortunately, there are circumstances in which a surviving spouse may be personally responsible for paying a deceased’s spouse’s debt, including credit card debt. For example, if you live in a community property state or you jointly assumed responsibility for debt with your deceased spouse, the surviving spouse may be personally responsible for paying your deceased’s spouse debt. These debts, if not paid, could impact the surviving spouse’s credit. In other states, however, the deceased’s spouse’s executor will be responsible for paying the debt from the deceased’s spouse estate. In these situations, the surviving spouse’s credit should not be impacted, but you should always review your credit score regularly to identify and resolve any discrepancies.

For more information, read: Debts and deceases relatives.

6. Maximize Social Security benefits

Even if you're now on your own, Social Security recognizes that you were once part of a married couple, and offers benefits to surviving spouses. Widows are generally entitled to 50% of their former spouse's Social Security benefits, if those benefits would be greater than their own Social Security benefits.3

As a surviving spouse, you can receive full Social Security benefits at your full retirement age or reduced benefits as early as age 60. A disabled widow or widower can get spousal benefits as early as age 50 if the disability started before the death of your spouse or within 7 years.3 But be sure you have researched all your options for when to start receiving Social Security. It could pay to delay taking Social Security until your full retirement age or even a few years beyond it.

Read the Viewpoints special report on How to get the most from Social Security.

You can't avoid the turmoil that comes with the death of a spouse, but recognizing how your personal finances might change could help you make thoughtful, rather than rushed, decisions and provide more solid financial ground as you transition to being single.

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