Podcast 116: Are You Financially Prepared to Lose a Loved One?

Losing a loved one is emotionally devastating—but it can also create unexpected financial turmoil. In this episode, Gregory Ricks shares eye-opening statistics, personal stories, and practical steps to help you prepare for the financial aftermath of a death in the family. From funeral costs to lost income, estate planning to surviving spouse concerns, we cover what you need to know before a crisis hits. Whether you're 30 or retired, now is the time to get involved and make sure both partners are on the same financial page.

SOURCES:

Over Half of Americans Stumble Financially After Losing a Loved One. Are You Prepared?

Half of Americans Struggle Financially After Losing a Loved One

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Transcript

Hey, welcome. I'm your host, Gregory Ricks, a financial advisor here to answer your questions and help you win with your money.

Here's an article from Kiplinger: Over half of Americans stumble financially after losing a loved one. Are you prepared?

Losing a loved one can be overwhelming, and for many, it also puts an unexpected strain on their finances. A study shows losing a loved one can take a deep emotional and mental toll. Yet, beyond the grief, many are unprepared for the financial strain that follows — from paying for funeral expenses to everyday living costs, the financial fallout can be overwhelming.

You know, one of the things is the decision-making that happens on the back end of one's life, and then the death, and then the transition. Oh my gosh, that is so important, and people are not prepared.

And one of those themes — it got back to me that a spouse, a gentleman, had died, and his wife wasn't that familiar with who's handling the money. And it's like word got back to me through another person that kind of like, “Who’s Gregory Ricks? You know, I don't even know them.” But turns out, that's who's handling the money. And like, we've been working with them for years, and for that surviving spouse not to know who we are, what we're doing, what they had — was a lot of concern, a lot of worries.

And here's kind of the question: What do I do now? Am I going to be okay? Do I have enough money? Is my money going to last? Am I going to be short of income ever?

See, I've got 20 questions here for y'all. All those things, and one of them is: What do I do now?

I want to know. I want some feedback. You can email me: info@gregoryricks.com. You don't have to call in — email me or call the office.

But if your spouse dies, are you going to be okay? That is a big question. If your spouse dies, are you going to be okay financially? Do you have certainty? Do you know how that's going to play?

Have you discussed that? You probably haven’t. Are you going to be okay? Have you really looked at this and talked about it? You’ve just made an assumption. The survey I gave you there along the way makes me wonder if you've not talked about it.

Here’s a question: Are you involved in the financial aspects of your life — with your spouse — in the bill paying? Do you have some sort of awareness of what goes on? Is there a system? You may not handle and do it — and I get that, and that’s okay — but do you know where to go and find that stuff should something happen?

What about your retirement funds? Do you know what you generally have, and is there a plan for taking income? How much of those sources of income is going to go away? Do you have a handle on that? Are you involved with your spouse on the financial planning aspect of your life — retirement planning, and so forth — regardless of whether you're retired or not, you're still working?

And I don't mean for this just to be retirees. You both have to be involved. If you're age 30, both of you need to be involved, and both have a say and involvement in that process from now going forward.

A study by the Western and Southern Financial Group shows how prepared or unprepared Americans feel about financial challenges that can come from the loss of a loved one. Over half of Americans — 51% — experience financial stress struggles after losing a loved one.

Sixty-two percent of Americans don't feel financially prepared to handle expenses that may arise if they lose a loved one — with Gen Z (72%) being the most likely to say so. Thirty-nine percent turned to credit cards or personal loans to cover unexpected expenses after the loss of a loved one. Gen Z (47%) was the most likely to do so.

Now women — 68% — expressed more financial concern than men at 55%, highlighting a gender gap in perceived readiness.

While over half the participants said they have struggled financially after losing a family member, 14% described their challenges as significant, while 37% said they were manageable.

The death of a spouse can also result in a considerable decline in average income for the surviving spouse. You need to look at that situation: if a spouse dies, what happens to the household income? How much of it goes away? How are the bills going to be paid? Do bills go away too, because one of you died?

See, this is particularly difficult for baby boomers — 60% — compared to Gen X at 51%, Millennials at 33%, and Gen Z at 39%, per the survey.

Affording immediate living expenses posed a challenge, especially for Gen Z at 41%, and Millennials at 34%. Many (26%) also feared falling behind on mortgage or rent payments — meaning the roof over their head, they're going to be concerned about. How are they going to manage that?

You know, and I talked to you earlier about one of our rules is both of you have to come in, and both of you have to be involved. And you should both be involved in the annual strategy meetings as well.

I'm just giving you these surveys here, these statistics on the survey. And we listen. We get people that come in and say, “Well, you know, she's not that into it. She doesn't want to come.” Well, she's going to have tremendous trouble, is what I'm seeing here.

What percentage are you in? No matter which demographic group, there's going to be impact.

You know, you go to church together. You go on vacation together. You may not go buy a car together — but you probably should — but you darn sure should be talking about your retirement together, your income planning. And part of that is, one of you is going to die before the other. And how’s that impacted? What to do?

You probably go about life and these little things you do, and you don't share with the other spouse. You know, like, “What? Where did he leave the key to that? How did he do that? Where did he keep this?”

I share that stuff. I don't want it a secret. I think others should know how I do that. That’s in the business. It’s also in my personal life.

What if something happened to me? All this has to continue on. It doesn't stop or end because I die — and I will one day, hopefully like, you know, 50 years from now. But it has to continue on.

There was a discussion — she mentioned to me the other day. We were sitting, talking, and I could just see she was a little emotional at the moment. She says, “You know, I just don't want to do this without you.” And it’s a property that we have some fun with. She said, “Well, I don't want to do this without you.”

And I said, “Something happens to me? You sell that thing, okay? You just put it up for sale next day. Move on. I’m fine with it. It’s there for us to enjoy.” But she doesn't want to do it without me, so I get that. Completely do.

So look, here's what — and I'll tell you — I love my spouse with all of my being, and if I move on before her, I want her to be comfortable and financially taken care of, and all the decision-making. And no, it won't be easy, but it also doesn't need to be horrible. And she needs to be prepared.

The annual cost of a funeral — it's not surprising that many people are caught off guard when it comes to financial costs of losing a loved one. The average cost of a funeral can range from $6,300 to $8,300, depending on whether it includes burial or cremation services. The median cost for a traditional funeral with viewing and burial is around $8,000.

I'm going to tell you something — I think that number is low. I really do. And I know from experience. There is a range to what’s done, but I'm just going to tell you — might be prepared for it costing more.

Other costs to consider may include the burial plot, flowers, memorial services, headstone markers, and the obituary in the newspaper. And that's why it may be more, because some of those things are not figured in that average.

There's also legal matters, including lawyer fees and costs associated with selling off assets — real estate or other property — paying for outstanding loans and bills, not to mention lost wages. You also have succession to think about.

Here's a few financial steps to follow after loss of a loved one. If you haven't yet faced the loss of a loved one and the financial challenges that often follow, here's a few steps you can take to reduce confusion and stress when the time comes:

1. Gather all financial documents. This may include estate planning documents such as wills, trusts, tax returns, utility bills, rent, mortgage payments. Do each of you know where all this is?
   
   
   
2. Inform agencies providing benefits. The Social Security Administration, Veterans Affairs, and Medicare are only a few of the agencies that would need to be notified.
   
   
   
3. Contact their bank or financial institution. You'll likely need a death certificate to access the financial information of your loved one. Also, there is a transfer-on-death order.
   
   
   
4. File the will with the probate court. You're probably going to need an attorney involved and helpful. That needs to be part of your relationship with your financial advisor, in my opinion — and we have somebody to help you with that.
   
   
   
5. Settle all remaining debt. In many cases, any remaining liabilities — a mortgage or auto loan — will be payable by the person who inherits them. Credit card balances, student loans, medical loans, and more are typically charged against a deceased's estate.
   
   
   
6. Prepare a final tax return. We didn't even get into qualified money here, which is a whole other set of rules and possible taxes, and could cause negative situations tax-wise if not handled right. But number six is to prepare a final tax return. The final tax return should be submitted by the next tax filing deadline. Work with a tax consultant or attorney to ensure the process goes smoothly.
   
   
   

And then you've got the transition of qualified monies to make sure that's done properly. And it is kind of — you have to have decisions. And it impacts — was it before required beginning date or RMD? So it's the age at death, age of the spouse.

Hopefully, this helps you a little bit there, but you see why it's important for both to be involved throughout all the planning process.

Thanks so much for listening to Ask Gregory, where we answer your financial questions. You can find us anywhere a podcast can be found — and on YouTube and Facebook Live every Saturday from 10 to 1.

Subscribe and tune in next time.

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