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Financial Factors
“… odds are high that wives will outlive their husbands. In
fact, 80% of women live longer than their spouses, and often by
many years, on average 14, according to the U.S. Census Bureau
…. Given those facts, it would seem that husbands would do more
to make sure that their wife's transition to widowhood doesn't re-
sult in poverty. But that's not the case …”—Robert Powell1
While my dad had life insurance, he was what any life insur-
ance agent would call “underinsured”—and that was not simply to
sell more life insurance—he had less than what was needed to sus-
tain his family in case he died prematurely.
The Social Security Administration used to give “survivor’s
benefits” to widows and their children through college. However,
we found out too late that these benefits were severely changed.
Widows and widowers do not get “survivor’s benefits” until they
reach sixty years of age. This was a problem for a forty-nine-year-
old widow like my mom. If they have children, they only get bene-
fits until those children graduate high school, not college.
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Kimberly Rose Carolan
ple, I did not need financial help with my father’s death since I had
a husband and my own family. But my younger brother still lived
at home and my mom needed significant financial assistance since
they lost their primary wage earner. Our job as Christians is to find
out who needs help and to offer that help. This does not necessarily
mean giving money although it could. But perhaps we provide ser-
vices to a bereaved family that would otherwise be expensive to
the family. It does require a generous attitude, a spirit of giving and
service. Let us look further into the financial ramifications for the
bereaved such as looking at the effects of decreased finances in
addition to all of their other problems.
No man’s land
Following a death of a parent if you are under 18 years old or a
spouse, income may become depleted. These two types of loss can
be most trying financially because of decreased income and in-
creased expenses. Speaking in terms of widows, it is interesting to
note this definition of widow from the Hebrew language in the Old
Testament, according to Vine’s Dictionary of Old and New Testa-
ment Words: “The word represents a woman who, because of the
death of her husband, has lost her social and economic position.”2
Vine goes on to explain that in that culture, the condition was
worse if the widow had no children. Then they were resigned to go
back their father’s home. This was the situation in Genesis when
Tamar went back to Judah’s home after her husband died. So, the
woman suffers from the emotional turmoil associated with her
husband’s death and she also lacks the same social and economic
position.
Couple this loss of position with misinformation about the de-
ceased’s financial position, their understanding of federal govern-
ment assistance and improper financial planning. Social Security
cannot be relied upon for retirement or for death benefits. My dad
was under the impression that Social Security would give a “survi-
vor’s benefit” to his widow once he died. They did in times past,
but as of this writing, they only give that benefit when the widow
turns sixty—my mom was forty-nine. He thought my brother
Kevin would get something through college. Again, that was the
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Walking through the Valley of the Shadow of Death
case in the past but Social Security cut the “survivor benefit” back
to pay only until the child graduates from high school. Kevin re-
ceived a small amount as he was in his last year of high school.
But after graduation, the small amount from the Social Security
Administration (SSA) stopped. According to the SSA, these are the
only people who receive benefits:
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Kimberly Rose Carolan
would see fit to help widows through the current US Tax Code,
particularly with Personal Income Taxes. They do have a check
box on the Form 1040 for “widow(er).” However, a widowed per-
son may only use this check box for two years after the spouse’s
death. Then they revert to “single” or “head of household” status.4
What does this mean? Married people get a favorable tax
treatment. This is the government’s way of encouraging marriage
or staying married. Widowed people only get this favorable tax
treatment for two years after the death of their spouse. Then they
are “punished” into the “single” tax status. Did the widower
choose to get divorced? No. Was the widow simply unmarried?
No. These people were trying to be married people—what the tax
code “wanted.” However, through the advent of death they have to
pay higher taxes after two years and continue unless they remarry.
Here’s to helping those who are downcast—make them pay more
tax than before their loss!
Life Insurance
Life insurance is another area that needs attention yet few peo-
ple effectively plan for it. My dad’s life insurance, which was un-
der-funded by five-sixths of what most insurance agents would
recommend, was all my mom had for a death benefit. The insur-
ance industry recommends life insurance to be ten times the
household’s expenses. For example; a household that spends
$40,000 per year on normal expenses needs to have $400,000 in
life insurance. Most employers allow employees to get an inexpen-
sive $100,000 policy. But people need to seek out private insur-
ance for the rest. This typically requires a blood test, health
questionnaire and physical so you should get life insurance before
you need it! If the household depends on the husband’s income, the
husband should be the one insured. If the household depends on
both the husband and wife for all expenses then both should be in-
sured in the amount they contribute to yearly expenses multiplied
by ten.
Why is this amount so high? Typically this amount helps pay
for funeral expenses ($5,000-10,000 for a standard funeral), medi-
cal expenses billed after the death, medical expenses that depleted
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savings prior to the death, living expenses for the survivors while
they piece life together again and replacing the deceased’s future
potential earnings. Will the wife need to update her skills to pay
for her current obligations? Then it will pay for her college or vo-
cational training tuition. Will it take time for the wife to sell the
current home and reduce her standard of living? Yes. So this
money allows time for this to be done without having a foreclosure
notice posted on the door. Did the family have extraneous debt that
is eating away their net income? If they are like most Americans
they do. The life insurance helps pay this debt off. Were the kids in
college depending on mom and dad to pay their tuition? Again,
you see where insurance comes in handy. Typically, expenses
come “out of the woodwork” after a death. The insurance helps the
shelter the survivor from being “blind-sided.”
Prudential puts it this way on their information about life insur-
ance:
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Kimberly Rose Carolan
When applying for our life insurance policy we did not want to
have a proper insurance policy (the ten times the yearly expenses).
But the life insurance agent asked me, “If Joseph dies you won’t
really feel like working will you?” The reality is that I would not
feel like doing anything. No one in their right mind would. The life
insurance protects against depending on immediate income from
the grieving spouse.
Insurance agents know that many people are not insured prop-
erly for life insurance and wish to create awareness. When meeting
with her auto insurance agent, my mom told her story of being un-
derinsured with life insurance to her agent. He asked if he could
use her story with potential clients and she agreed. To her, it was
not a story that would line the pocketbook of this insurance agent,
but a story that could keep people out of the desperate need she
found herself in. Like being underinsured when you rear-end
someone on the freeway is expensive to you, being underinsured in
life insurance “costs” the surviving spouse (and other beneficiar-
ies) a lot in potential financial trauma. In addition, being properly
insured costs a lot less than people realize. And it can be worth an
unimaginable amount if needed.
With the little my mom had, she paid for the funeral, medical
expenses, about a year of college, fixed up her home, tried to start
a business and paid her current bills. Obviously, it went quickly. In
three years of her business she barely made enough, so she funded
her life by refinancing her residence a few times. Once the market-
place no longer supported that she tried to sell her house. The
housing market in her town “flat-lined” right when she tried to sell.
This left her with a home that would not sell, a pending foreclosure
and barely enough food to live on. Alone and missing her husband,
she sat in a horrible situation that my dad, had he known, would
have never left her in. Who would help? Surprisingly few would.
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Kimberly Rose Carolan
Back to school?
Another significant factor facing survivors, particularly those
dependent on the deceased’s income, such as widows and the fa-
therless is school. Survivors need to look at their own income pos-
sibilities and make hard decisions about how to improve their
situation. A fatherless son who is in high school needs to decide
whether or not to go to college or what to study at college to help
support his mother. Perhaps he wanted to study music but he will
need to forego his passion for something more practical like a
business degree. A young widow who stayed at home with her
children and never finished college may need to consider finishing
college but may need to finish quickly if she has limited income or
assets.
When my mom and dad were first married they decided that it
was important for my dad to finish college. My mom supported
them financially as a secretary while my dad studied engineering.
When he finished school and got a professional position, my
mom’s thoughts turned to having children. While she took two
years worth of classes, she never finished her degree. What was the
point? Her husband earned enough money for the family. Little did
they know that he would die when he was fifty-one years old.
A civil engineer at a company or government agency with my
dad’s experience made about $75,000 per year. A secretary with a
limited resume from raising her kids could make $25,000 per year.
A disparity exists does it not? Her only hope was to improve her
skills; probably through college.
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Kimberly Rose Carolan
The survivors may need money now but they are not capable,
based on their current skill-set (i.e. college degrees, professional
designations or years of experience) to earn the income they need.
If a family depended on the husband’s $75,000 salary, which was
completely spent on their obligations and the wife could only get a
job today for $25,000 per year, based on her skills and experience,
then the wife will be stuck with hard decisions.
Does she sell her home? What if there is not much equity in the
home? Does she cash out the husband’s retirement (and, possibly
be taxed 20% of that money for early withdrawal)? How else can
she cut expenses? What about the two children at home? She may
only be able to afford a one-bedroom apartment. Where will her
children sleep? Will they need to ask a relative for assistance or for
a place to stay? How much money will she need to go to college?
Will she be eligible for scholarships or federal aid? How long will
it take to finish college? What salary will she make at “entry level”
after her degree? She homeschooled the children but now she
needs to work during the day and cannot afford private school.
Will she send her kids to public school? Can she find a job where
she can stay home and make enough money? These are all now
questions that the family needs to answer while dealing with their
grief and all of the above problems. These are hard questions that
have variables specific to individual circumstances.
And slashing expenses and selling homes is a temporary band-
aid to the problem if she can only earn $25,000 per year. Equity in
a home will only last so long. Relatives can be demanding or force
their parenting style upon her children but that may be her best op-
tion for a new home. New public school friends may tempt her
children to make bad choices. She will have less time with her
children to help them make sense of their new world without their
father. She will have less time to deal with her own feelings or
make sense of her own world. It’s not fair, but it’s her new reality.
Who will help her family?
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these are one-time large expenses. What are these expenses typi-
cally? These include final medical bills, funeral expenses and other
incidentals. These are usually covered by life insurance funds. But
if the family had no insurance or was underinsured these can be
catastrophic.
A standard funeral is one of the most expensive things a person
will purchase in their lifetime. At the time of this writing it ranges
from $6,000 to over $10,000.6
Medical expenses depend on the health insurance and vary
based on circumstances. After a major illness some plans may be
reaching the person’s lifetime maximum. My dad’s insurance plan
was like this. He was within a few thousand of the millions his in-
surance would cover on his healthcare for his entire life! If the per-
son’s health insurance is maxed out, the family may owe quite a bit
after the death of their loved one. Fortunately, these expenses are
not recurring but they may add another burden shortly after the
death.
Quite simply, this starts the survivor’s own nightmare that
comprises the loved one’s death. Some of these issues only apply
to those financially dependent on the deceased which those who
lost their loved one will face the rest of their lives after their initial
grief ends. For those who have people around them who have ex-
perienced a loss on this level, it can give you more insight into the
obstacles that the family left behind faces. These factors will not
easily go away. My mom and brother were left in this category
when my father died.
For those whose lost loved one did not support them, the loss is
still difficult as it’s based on the grief and the emotions that follow.
When my dad died, my experience was in this category. However,
my heart suffered from the loss. But I did not have the other factors
that my brother and mother had to deal with in addition to the ex-
treme emotions that come with grief.
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Kimberly Rose Carolan
They further found that not only were widows in poverty dur-
ing their retirement years but widows tend to have a significant
drop of income prior to the husband’s death. The mean time is
about 31 months prior to the husband’s death. This means that
there was a drop in income for over two and a half years prior to
the husband’s death!8
Think about it: there would likely be a drop in income for two
and a half years prior to the husband’s death. The family would
already be running on a likely deficit or eating into savings or in-
vestments (or racking up large credit card bills as most Americans
do on deficit spending). It is likely that the family is spending more
than before. Even if nothing else changed in their spending habits,
the family would spend more money on healthcare in those last
years to care for the husband’s health. In reality, the family would
spend more in other categories that are “convenience” categories
of spending. There would be less time to cook because of increased
doctor appointments, hence more eating out. There would be less
the husband could do so there would be increases in costs on enter-
tainment, repairs for home and cars and other things that the hus-
band could no longer do prior to his death. Obviously, many of
these expenses would continue once he was no longer alive.
In their studies, The Center for Retirement Research at Boston
College found that widows tend to have less money than their mar-
ried counterparts:
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Walking through the Valley of the Shadow of Death
Not only that but when a husband dies, Social Security and re-
tirement benefits are either cut or completely disappear depending
on their personal circumstances.
They found that women are more likely to be widowed if the
husband tended to be sickly throughout his life (his health usually
deteriorated about ten years prior to his eventual death) and if the
husband and wife have less education (college educated husbands
and wives are less likely to widow). This translates to lower earn-
ings prior to widowhood since college educated people command
higher salaries and sickly people tend to take more time off of
work to combat their health issues. This, coupled with women
earning less throughout their lifetime translates to widow’s pov-
erty.10
With my parents, this seemed to hold true. My dad was col-
lege-educated; my mom was not. My dad’s cancer first appeared
six years prior to his death. My parents’ income dropped off when
my dad had to take more time off of work and eventually lost his
job due to illness. This started about a year and a half before his
death. My mom has a lot less in her Social Security account than
my dad due to working fewer years and earning less in the years
she did work. She will eventually receive survivor benefits. And
she has no retirement savings whatsoever!
In the article, “True Love Means Planning Ahead,” the author
gave ten ideas to help alleviate the potential poverty of the widow.
If the husband cares about his wife’s financial situation after death,
then some of these ideas may benefit the widowed wife and avoid
dooming her to poverty after his death. He suggests delaying re-
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Kimberly Rose Carolan
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Walking through the Valley of the Shadow of Death
Conclusion
Financial factors for survivors who depended on the deceased,
such as spouses or children at home, are extremely significant. Lit-
tle of this damaging and detrimental category of the survivor’s new
world is mentioned. We tend to think of the emotional responses
and initial grief as the crux of the experience with death. While
those are extremely “visible” sources of pain, underlying it is the
reality that the child without her father may not be able to afford
new school clothes or that the widowed mother cannot pay her
electricity bill. A month ago she could but her life insurance ran
out. We assume that, because of her husband’s high-profile job,
she is set for life when the reality is that “he” was set for life—she
was not.
Many people do not know how to plan for death. The mass of
Americans do not frequent insurance agent’s offices to learn about
life insurance options or form business entities to protect our in-
come or ideas. We save in bank accounts or retirement accounts,
assuming that is all the protection we need when life’s storms hit.
Then when life’s storms do hit, we do not have the right vehicles to
protect the little income or savings we do have.
In summary, potential problems for these families are the fol-
lowing: little help from the Social Security Administration, unfa-
vorable tax treatment after two years, being underinsured with life
insurance policies, massive medical expenses, little in assets that
will pass on after death, less income potential for women, less pro-
fessional experience for women, lack of college education, a
longer life expectancy for the spouse earning less lifetime income,
difficulty with current obligations even for a two-income family,
less savings for a significant time prior to spouse’s death and sur-
rounding people not knowing the family’s truly bleak outcome fi-
nancially.
Who will help? Will you have compassion on the widows,
widowers and children living at home and others who depended on
the deceased for their well-being financially? Do not assume that
everything will be okay. Do not assume that someone else will
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Kimberly Rose Carolan
help. That “someone else” will probably never come. Do not bur-
den these poor souls by your lack of care or compassion and omis-
sion of help. Even if you feel uncomfortable or awkward asking
about someone’s financial condition, they will be more uncomfort-
able if you never care.
Money is not necessarily where you need to help (even though
it may be as well). Maybe the deceased father did the home main-
tenance before. Perhaps you can volunteer to help the widow main-
tain her home or get it ready to sell. The widow may have less time
to cook since she has to work. Perhaps you could help provide
meals to the family. Or perhaps the widow’s children no longer
have their mom at home so perhaps you could offer to watch her
children for free (or a reduced cost). Whatever it is, there may be a
way for you to help. Be open with your new understanding of
those affected by these financial factors and be willing to give ei-
ther with your money or with your time or both!
1
Robert Powell. “True Love Means Planning Ahead—Ten Ways Husbands can
Help their Wives Survive Widowhood.” MarketWatch,
http://www.marketwatch.com/news/story/ten-ways-husbands-can-
help/story.aspx?guid=%7B4973CF6A%2DA5E8%2D48D8%2D9041%2DA594
DFE5DF1C%7D&dist=TNMostR, Nov 7, 2007.
2
W. E. Vine, Merrill F. Unger and William White, Jr. Vine’s Complete Exposi-
tory Dictionary of Old and New Testament Words. (Nashville: Thomas Nelson,
Inc, 1996), p. 288.
3
Social Security Administration. Survivor’s Benefits as of 8/27/07,
http://www.ssa.gov.
4
Internal Revenue Service. “Publication 501 (2006), Exemptions, Standard
Deduction, and Filing Information”,
http://www.irs.gov/publications/p501/ar02.html#d0e2601.
5
Prudential Insurance Company. “Insurance FAQ.”
http://www.prudential.com/view/page/public/13238#2.
6
Federal Trade Commission. “Funerals: A Consumer Guide”. May 4, 2007.
http://www.ftc.gov/bcp/conline/pubs/services/funeral.pdf., pg. 1.
7
Nadia Karamcheva and Alicia H. Munnell. “Why are Widows so Poor?”
Center for Retirement Research at Boston College: July 2007, Number 7-9, p. 2.
8
Ibid, p. 2.
9
Ibid, p. 2.
10
Ibid, p. 3-4.
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Walking through the Valley of the Shadow of Death
11
Robert Powell. “True Love Means Planning Ahead—Ten Ways Husbands
can Help their Wives Survive Widowhood.” MarketWatch,
http://www.marketwatch.com/news/story/ten-ways-husbands-can-
help/story.aspx?guid=%7B4973CF6A%2DA5E8%2D48D8%2D9041%2DA594
DFE5DF1C%7D&dist=TNMostR, Nov 7, 2007.
12
Ibid, p.1.
67