After Losing a Spouse - Senior Financial Options

After Losing a Spouse – Senior Financial Option Tips

After Losing a Spouse – Senior Financial Option Tips. Today’s guest blog is by Medicare Advantage. The opinions expressed by the author in this and all guest blogs are not necessarily those of The Attorneys For Freedom Law Firm.

After Losing a Spouse - Senior Financial Option Tips

After Losing a Spouse – Senior Financial Option Tips

Few things in life are more emotionally challenging than losing a spouse. When someone is dealing with the loss of a loved one and life partner, they’re also faced with important life decisions. They’ll likely need support when making decisions that used to be made with a spouse, such as financials.

Financial situations change after the loss of a spouse. Survivors have to retire as individuals, and they might even be eligible to receive retirements benefits from their deceased spouse’s Social Security. Aside from survivor benefits, there are other considerations that they might not understand. If you have a senior loved one who has lost a spouse, you can offer them help with financial decisions in the following areas.

Life Insurance Payouts

The deceased person may have had a life insurance policy, which would make the widow or widower the recipient of those benefits. With this payout, the widowed person has the option to collect the cash for retirement or invest it in a money-making venture. Investment strategies typically work better when you start younger, as there’s more time to rebound from a risky investment. If possible, these choices should be made with the help of a financial advisor.

 

After Losing a Spouse – Senior Financial Option Tips

Retirement Funds 101 – Pension, 401(k), and IRA

Employers contribute to pension funds on the employee’s behalf, and the fund becomes the employee’s retirement income. There’s not much individual control in company pension plans because the company hires a fund manager to manage all the money. This leaves the individual in the dark about what’s going on with the money.

Like pensions, a 401(k) is set up through an employer. Starting at age 59 and a half, the individual can begin withdrawing without penalty taxes, and minimum withdrawals must begin by age 70 and a half. These withdrawals are taxed, but any contributions and earnings are not taxed until the individual starts taking money out. In a 401(k) plan, the individual makes the choices in how it’s invested.

Anyone can start an Individual Retirement Account (IRA). Individuals can put their money into a plan that’s managed by a brokerage firm. The older the person is, the more they can set aside, and the money is only taxed during withdrawal. Roth IRAs, on the other hand, invest pre-taxed money into investment vehicles, and there isn’t a tax on the gain or withdrawals. There are caveats to Roth IRAs; the fund has to be engaged without any withdrawal for five years, and there’s an income limit of $135,000 for a single person. The money in a Roth IRA fund can stay in there forever with no mandatory payouts. The fund can be willed to heirs with no tax liability to them.

After Losing a Spouse – Senior Financial Option Tips

Medical Plans

Once an individual hits age 65, they become eligible for government-funded health insurance through Medicare. However, medical costs increase with age, and Medicare doesn’t offer full coverage. One-third of Medicare recipients also have a Medicare Advantage Plan, in which a private insurance company manages Medicare benefits. These add-on plans help cover medical costs that Medicare doesn’t cover. You can learn more about Medicare Advantage to help your loved one make better decisions.

 

Investing for Seniors

Although investment funds should be started at a younger age as part of a long-term plan, seniors don’t have this luxury. Someone who is close to retirement should re-manage their portfolio and reduce risk by switching to conservative investments. Mutual funds are safer choices that have fewer earnings, but they’re good options for seniors who don’t have much time to rebound from a crash.

Why does a widowed senior need help with financial planning? Because they might be receiving extra cash flow from a death benefit, or they might be losing cash flow due to reduced income. Because they’re in a stage of retirement where income might be fixed and time can’t be wasted on not saving or investing. Because important decisions that they made with their partner now have to be made alone, and you’re the support that they need. Educate yourself so you can help your loved one make prudent choices.

After Losing a Spouse – Senior Financial Option Tips

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