- Widows offer lessons to the unprepared: get your financial life in order now
- Many without life insurance report struggling to meet basic needs
- “The news is unsettling: women are not prepared for the loss of a spouse and the problems are financial and much more"
A unique survey looking at the financial and emotional toll of losing a spouse -the 2014 New York Life “Loss of a Spouse Study”- finds widows are unprepared for the financial difficulty that the loss of a spouse creates. Following the loss of their spouse, 68 percent of widows reported significant life changes, with financial concerns rising to the top of the list. The burden of these changes amounted to years of undue hardship after the loss.
“The news is unsettling: women are not prepared for the loss of a spouse and the problems are financial and much more,” said Chris Blunt, co-president of the Insurance and Agency Group, New York Life.
The survey examined the repercussions of the loss of a spouse on 897 widows and widowers who were within 10 years of their loss. It focused on how the loss impacted daily life from both a financial and emotional perspective, narrowing in on financial security following the loss and how it may have changed as a result. Additionally, the survey explored the impact that life insurance has on their lives, both at the time of their loss and in the future.
Financial Burden is Real – and Greater for Women
Women suffer the burden of the loss more intensely than men. Forty percent of widows reported negative lifestyle changes the year following the loss, compared to 24 percent of widowers. The financial impact was even greater: two thirds of widows experienced a significant financial change compared to half of widowers. The top five life changes following the loss were financial in nature, with a greater percentage of widows impacted in these financial areas of their lives:
Life Changes Following Loss of A Spouse
Adjusting to a change in income level
Budgeting for one income
Cutting discretionary spending
No longer being able to afford a vacation
No longer adequately saving for retirement
For some widows, the lifestyle changes were even more dire: two in five widows whose spouses did not have life insurance at the time of the loss (39 percent) reported that they were just making ends meet or struggling to meet basic needs within the first year of the loss.
Having a Financial Plan Is Often Not Enough
The majority of women reported feeling secure about their financial situation before the loss – yet after the loss, 59 percent reported they didn’t have enough life insurance in place to feel financially secure. Approximately half of women (47 percent) report that they wish they had some or more life insurance to help cushion the financial impact of their loss.
“These widows learned too late that they were underinsured,” added Mr. Blunt. “The message is clear – life insurance proceeds are important, but the need for that financial security blanket is much greater than what exists in many financial plans.”
Among those whose spouse had life insurance at the time of the loss, the life insurance proceeds lasted almost two and a half years – yet they wished these funds would have lasted more than 11 years longer, for a total of nearly 14 years.
These findings are directly in line with what New York Life’s Life Insurance Gap survey demonstrated last year. The Life Insurance Gap survey of 1,000 Americans age 25 and over with dependents found that many woefully underestimate their life insurance protection needs. It similarly revealed that the amount of life insurance protection in place equaled three years and the amount of protection needed totaled 14 years.
“These consistent findings give us the answer to the question I posed when the Gap survey findings were announced: ‘If families have three years of coverage in place, what happens in year four?’ Widows have given us the bleak answer: years of undue hardship,” added Mr. Blunt.
Real World Advice from Widows
Including life insurance protection, widows reported a wish list – the things they would have done to be better prepared for their loss:
A Wish List When Looking Back
“I wish we had some or more life insurance on my spouse.”
“I wish we had saved more.”
“I wish we had detailed discussions about what might happen financially and otherwise if one of us passed.”
“I wish we had a better financial plan in place.”
“I wish we had organized all our important papers in one central location.”
“This wish list can act as a financial survival guide for couples so they can ensure they are better prepared for a loss,” said Mr. Blunt. “These widows offer us insight into what life has been like for them since the loss: the financial strain for many has been very serious and for almost all the loss has been life changing. These insights should serve as a lesson for couples: there are actions that can be taken now to alleviate the future financial burden that comes with a loss.”
The 2014 New York Life “Loss of a Spouse Study” analyzed how the loss of a spouse impacted widows and widowers from both a financial and emotional perspective. All respondents were required to be at least 18 years old and widowed within the past 10 years. In total, 897 widows/widowers were surveyed, with 33 percent aged 65 and under; and 67 percent over age 65. This online study was conducted using The KnowledgePanel, a statistically representative sample source used to yield results that are projectable to the American population. New York Life was not identified as the sponsor. GfK’s Public Affairs & Corporate Communications division executed the study, which fielded in June 2014. The margin of sampling error is plus or minus 4.5 percentage points at the 95% confidence level.