A Singular Retirement

It’s often the toughest part of the retirement conversation, arguably more difficult in many ways than convincing plan participants to max out their retirement investment. Yet it’s an often-overlooked part of the process that can have a devastating financial impact: the death of a spouse or partner.

Most plan participants designate their spouses or partners as their beneficiaries. While that’s good practice (and often a requirement), it fails to account for what happens should the spouse or partner pass away while still in one’s earning years.

To help plan participants understand how to plan for the unexpected, retirement advisors should ask questions such as:

1. How much retirement income will there be jointly? How is that total impacted by the death of one spouse or partner?
   
   
2. If death of one partner occurred today, how would that impact the survivor’s retirement plans?
   
   
3. How much would plan participants need in order to cover a chronic illness of one or both partners in retirement? How would that impact retirement savings?
   
   

The answers to these questions can help retirement advisors move the conversation toward planning for the unexpected. Some areas to cover include:

Social Security

What will happen to Social Security benefits in the event of one spouse’s death? The answer isn’t always easy. Depending on whether the spouse has collected any benefit, surviving spouses or partners may or may not be eligible for survivor benefits.

Also, it’s a good time to discuss how to avoid collecting Social Security benefits before full retirement age, even in the case of one partner’s death. Retirement advisors can help plan participants find ways to delay collection through other means, such as a life insurance benefit, for example.

Other Benefits

Does either spouse have life insurance through their employer? Did one or both spouses receive regular bonuses or employee awards? Who in the company can the surviving spouse contact in the event of an unexpected death? Is there a pension? What about a 401(k)? Plan participants should know how to navigate each of these benefits to their best advantage.

Health Insurance in Retirement

If one spouse suffers a lengthy illness, how will that impact the retirement fund? Retirement advisors would do well by their clients to recommend options for post-retirement supplemental healthcare coverage, including figuring what out-of-pocket costs can be afforded on a retirement income.

Real Estate and Savings

Often, surviving spouses will make quick decisions in order to gain capital. However, not all decisions should happen quickly. Retirement advisors should help participants build a backup plan that allows the surviving spouse to hang on to the house and not have to spend down the savings account. What assets do the couple have that can be used as interim cash flow until the estate settles?

By having the tough conversation with your plan participants, you can help them avoid a large financial burden should the unexpected happen.

How do you approach the death of a spouse conversation with your participants?