What will happen to Social Security benefits in the event of one spouse’s death? The answer isn’t always easy.
It’s often the toughest part of the retirement conversation,
arguably more difficult in many ways than convincing plan participants to max
out their retirement investment. Yet it’s an often-overlooked part of the
process that can have a devastating financial impact: the death of a spouse or
Most plan participants designate their spouses or partners as their beneficiaries. While that’s good practice (and often a requirement), it fails to account for what happens should the spouse or partner pass away while still in one’s earning years.
To help plan participants understand how to plan for the
unexpected, retirement advisors should ask questions such as:
The answers to these questions can help retirement advisors
move the conversation toward planning for the unexpected. Some areas to cover
What will happen to Social Security benefits in the event of one spouse’s death? The answer isn’t always easy. Depending on whether the spouse has collected any benefit, surviving spouses or partners may or may not be eligible for survivor benefits.
Also, it’s a good time to discuss how to avoid collecting
Social Security benefits before full retirement age, even in the case of one
partner’s death. Retirement advisors can help plan participants find ways to
delay collection through other means, such as a life insurance benefit, for
Does either spouse have life insurance through their
employer? Did one or both spouses receive regular bonuses or employee awards?
Who in the company can the surviving spouse contact in the event of an
unexpected death? Is there a pension? What about a 401(k)? Plan participants
should know how to navigate each of these benefits to their best advantage.
Health Insurance in Retirement
If one spouse suffers a lengthy illness, how will that
impact the retirement fund? Retirement advisors would do well by their clients
to recommend options for post-retirement supplemental healthcare coverage,
including figuring what out-of-pocket costs can be afforded on a retirement
Real Estate and Savings
Often, surviving spouses will make quick decisions in order
to gain capital. However, not all decisions should happen quickly. Retirement
advisors should help participants build a backup plan that allows the surviving
spouse to hang on to the house and not have to spend down the savings account.
What assets do the couple have that can be used as interim cash flow until the
By having the tough conversation with your plan participants, you can help them avoid a large financial burden should the unexpected happen.
How do you approach the death of a spouse conversation with your participants?
Before leaping into the unknown, we recommend a thorough examination of your plan. Because we are experts in the field, we know the marketplace and know what your existing vendor is capable of offering. Through this examination, we can help you optimize the service you receive.get xpress proposal