The Financial Impact of the Loss of a Spouse on Your Retirement

The loss of a spouse is life-changing on numerous levels, including your financial planning. The future you saved years for will be different from what you envisioned, but there are financial opportunities to support you after your loss. In addition to any life insurance payout and assets you’re entitled to, your spouse’s own retirement savings could impact your own retirement funds.

How does your spouse’s death impact their retirement accounts?

If your spouse spent their life saving up money for retirement and passes away before they access any or all of the funds, you will be able to utilize those savings — if proper preparations have been made.

Bill Fray, a staff writer for, explains that retirement accounts have a process in place that bequeaths the account’s contents to a beneficiary upon the death of the account’s owner. If you as the spouse are listed as the account’s beneficiary, the account will transfer to you when you present a death certificate.

The details of how the transfer takes place and what the outcome is can vary. “The flexibility that a beneficiary has in terms of what can be done with an inherited retirement account, as well as the tax consequences that accompany the bequest, depends on many different factors,” explains Fray. The IRS has an array of tax regulations in place for inheriting an IRA, and these depend on factors like the remaining required minimum distributions and what you do with the funds.

You could treat the account as your own but keep it separate, roll it into your own retirement account, or cash it out. Your ability to withdraw from the funds without penalty depends on your age as the surviving spouse. Fray points out that “withdrawals are subject to a 10 percent federal income tax penalty if the spouse has not reached age 59 1/2.”

If no beneficiary was ever specified for the account, it typically becomes part of the estate. To gain access to the account, you’d need to disperse the account through probate court, which can be a lengthy, frustrating situation. Thus, as with all of estate planning, plans must be in place for all your accounts were you or your spouse to pass away unexpectedly.

How does your spouse’s death impact Social Security benefits?

Social Security exists to provide financial aid to those who need it, like retirees in old age or dependent children of deceased spouses. Typically, if you contributed to Social Security throughout your life, you’d be able to start applying for payments in your mid-60s to help cover living expenses.

However, you may not survive long enough to receive the benefits you’re owed. In that case, as Mary Hall of Investopedia explains, “If you are eligible to collect Social Security benefits upon retirement, your spouse or dependents may be eligible to collect them in your stead in the event of your death.”

If you are a widow or widower who’s age 60 or older and has not remarried, you are eligible for Social Security Survivor Benefits. Tim Parker of Investopedia explains, “The same credits that entitle you to your own benefits also entitle certain people to survivor benefits — your spouse, a divorced spouse, children or dependent parents.” This allows you to receive payouts from your deceased spouse’s Social Security credits.

That doesn’t mean you can receive your own Social Security payouts and your spouse’s. What you do with one directly affects the other. The qualifications and guidelines of Survivor’s Benefits are so complicated that the government requires you to speak to a Social Security representative to receive them.

How does your spouse’s death impact their pension?

How your spouse’s pension will resolve upon their death depends on what they agreed to when they took the pension. “Each pension has different rules whether the pension gets paid to a spouse in the event of death,” explains Lance Cothern of My Bank Tracker. “Sometimes, your spouse has an option to choose whether to receive a higher benefit that stops when they die or a smaller benefit that can be passed to you upon death.” To determine how you could benefit, you need to review the contract and speak to a pension representative.

Although the loss of a spouse can greatly impact your household income and your plans for retirement, financial assistance and payouts are available that can support you — as long as you plan ahead properly.

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