FINANCIAL ISSUES CONTINUED: THE DEATH OF A SPOUSE

Probably the most significant emotional and economic event of an older person's life is the death of a spouse.

The death of a spouse causes bereavement and, oftentimes, a loss of household income for the survivor. For example, since Social Security stops at the recipient's death, a surviving spouse who previously received 50 percent of the deceased spouse's Social Security income, will receive only an amount equal to 100 percent of what the deceased spouse was receiving. But those who receive payments from annuities and private pension plans generally won’t lose income since almost all annuities are two-life annuities that are calculated to pay a constant amount until the death of the second annuitant.

But the death of a spouse brings with it not only the expense of the final illness, but also the cost of the funeral. And if the deceased spouse suffered from a chronic illness, the cost of long-term care prior to death may have depleted the financial resources of the couple. If Medicaid was the provider of the deceased spouse’s long-term care, the majority of the couple’s assets were already spend.

Result: The surviving spouse most probably has fewer assets for his/her support than had been planned. These circumstances often place older persons in a position of being influenced by family members, especially children, about how and where to live.

That’s why people should begin to plan for their later-life housing needs long before retirement, preferably while they are still in their fifties. After children are grown, many decide they need to move into a new and smaller home or condominium or find a new apartment. But those in their fifties should consider whether the housing selected now will be appropriate when they reach 65, 70, or even 80. This is especially true since folks in their fifties are generally at the peak of their earnings while those who have retired sometimes face reduced financial circumstances.

The life expectancy of a person who attains age 65 is 15 years for males and almost 20 years for females. Since the segment of our population over age 85 is growing so rapidly, we are now seeing old age extending from age 65 until 95.

Oftentimes, those who have passed age 75 find that their housing no longer meets their needs. And since the majority of those who live to past 85 are concerned with their ability to live independently, those having special medical or physical needs must decide whether their needs can best be met in their home or in an assisted living facility or nursing home.

That’s why it is essential that older persons consider the need to live in a safe environment that meets their needs, especially when they can no longer drive or are living alone.