We never imagine what we would do if we were to lose our significant other, but it’s also something that could happen at a moment’s notice. Of course, emotional distress is often the biggest hurdle. Even when you manage to overcome grief, you are faced with financial struggles that can feel just as difficult to overcome especially when your lost spouse was the main income earner. Let Maggi Tax guide you through the challenges that may come your way and how you can prepare for life as a surviving spouse.
1. Taking a Hit to Social Security Benefits
A change in marital status can snowball into a change in social security benefits. Typically, you would receive a monthly check to account for both spouses. If one of the spouses should pass on, the surviving spouse will receive payments based on the check with the higher amount. When your social security payments see a significant cut, the remainder is not always enough to cover the cost of living expenses.
There may be survivor benefits that you can ask your local Social Security administration about, but you should keep in mind that compensation usually begins at the date of your application, not when your spouse has passed. Instead of relying on this benefit that you may or may not qualify for, it helps to have a savings account in the works to prepare.
2. Living With a Decreased Household Income
When you lose a spouse, especially if that spouse was the primary income earner, you could find it difficult to adjust your expenses to match your decreased household income. A common reaction for stay-at-home surviving spouses in this situation is to pick up a job, but re-entering the workforce could pose a significant challenge the longer you’ve been unemployed. Even if you manage to find a job, it might not be enough to match what your spouse was making.
A great way to prepare for this common financial problem is to start creating an emergency fund ahead of time, even if you can only contribute a little at a time. If you’re primarily a stay-at-home spouse but have some spare time in your day, you may consider remote work or a simple part-time job to eliminate any sizable gaps in your resume.
3. Facing Fluctuating Changes In Tax Filing Status
Surviving spouses also face changes in their tax filing. If you have been married and filing jointly for quite some time, you’ll notice a significant difference when you enter a new tax bracket, and it may or may not work in your favor. On one hand, being in a lower bracket could present more opportunities for tax deductions. On the other, your standard deduction may decrease thus costing you higher rates. To help you prepare for this hurdle, you can read up on inflation-adjusted tax brackets and consult a tax professional to help you plan for every occurrence.
Tip From a Financial Expert: Consider Legacy Planning
A bonus tip from your trusted financial advisors is to set up a legacy or estate plan as soon as possible. Having these backup measures in place will help the transitionary period after losing a spouse go by a little easier, making it so your financial plan isn’t in the dark and that assets are distributed properly. This service may also cover life insurance policies which can also help you as a surviving spouse. To get started, trust in Maggi Tax!
Maggi Tax Helps Surviving Spouses With Financial Challenges
Are you worried about the problems you may face as a surviving spouse? Maggi Tax offers expert financial advice in Tampa covering the topic of financial struggles after losing a spouse and how to overcome them. A change in marital status is a good reason to seek a financial advisor, and our team is ready to help you in your time of need. Give us a call anytime at (727) 799-1701!
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