How to financially protect your spouse

ringsWhen it comes to household finances, it is not uncommon for one spouse to take a more active role. While it is often advisable for both spouses to share equally in managing the finances, many couples make the mistake of compartmentalizing financial decisions to the point that one spouse can feel left in the dark. Financial planning should be a team effort – even if one spouse has less interest or knowledge. Remember, neither spouse has to be a financial expert to contribute toward the achievement of the family’s financial goals.

The consequences of having only one family chief financial officer or CFO become apparent when that spouse is no longer able to handle those responsibilities for their partner – due either to death or divorce. In those cases, the widow or divorced spouse can be left feeling unprepared and incapable of handling this responsibility. After all, finance is not something that you learn overnight. Rather, financial literacy comes from years of practice.

Create your personal financial summary

The good news is that there are steps that every family can take to protect the spouse who may be less involved financially. That first step starts with shining a light on the household financial picture. Consider creating a spreadsheet or simple listing of all pertinent financial information. Every account, insurance policy or investment should be listed and include the name & contact number of each institution holding the account, the type of account (retirement or nonretirement), the approximate value or death benefit as well as any liabilities or debts. Important professionals including attorneys, financial planners or accountants should be listed with contact numbers. Also be sure to list online banking instructions. Creating a good financial summary can be invaluable for any family. Be sure to keep this information protected in a safe or safe deposit box or by secure electronic means.

Build a financial team

Next, consider working together to enlist the help of a “financial team” to create a comprehensive financial plan. Personal and family goals for the future can be discussed so that each spouse has a voice and can understand how the various pieces of the financial picture come together for the future. Having a financial team can also provide a go-to resource in the event that one spouse becomes ill or passes away. Consider establishing a to-do list for any special financial matters that should be addressed in the event of death. For example, according to Employee Benefits Research Institute, “Fifty-eight percent of workers and 44 percent of retirees report having a problem with their current level of debt.” Be sure to have a plan to address paying off significant debts such as a mortgage or other large liabilities.

Plan ahead for survivorship benefits

One of the biggest mistakes preretirees can make is to select pension and Social Security benefits that do not account for the worst-case scenarios when it comes to life expectancy. While it may be tempting to take a larger, single survivorship option, premature death could result in your spouse or beneficiaries being left with no payout – a gamble retirees should not consider making. Instead, crunch the numbers for 50 percent or 100 percent survivorship benefits so that the surviving spouse will continue to receive pension payments. Remember to review and optimize your Social Security benefits strategy for your surviving spouse, too.

Maintain adequate life insurance

Dealing with the loss of a spouse or partner is difficult enough without also having to face additional financial uncertainties. While determining how much insurance is needed can be difficult, start by asking yourself to what extent you would like your spouse or family to maintain their standard of living? Do you want them to remain in their home, pay off liabilities, have sufficient funds for education goals and also be able to retire one day? Be sure to maintain enough insurance to safeguard the surviving spouse against the possibility of an unexpected tragedy.

Review your documents and beneficiary designations

Have you completed a will, living will, power of attorney or trust? Do you have a beneficiary designation attached to your 401(k) or IRA? If you haven’t reviewed your estate plan and beneficiary designation in years, it is time to address this important piece of the financial puzzle. Consider reviewing your estate plan with your spouse and financial team to ensure that you have a solid plan in place.

While most companies only have one CFO, there is no reason that there can’t be two chief financial officers in the family. Working together with a financial team to address the issues noted above can help empower and protect the surviving spouse. Consider speaking to your financial, estate & tax adviser and, most importantly, your spouse or partner to determine the most appropriate approach for your family.


Kurt J. Rossi, MBA, CFP®, CRPC®, AIF® is a CERTIFIED FINANCIAL PLANNERtm Practitioner & Wealth Advisor.  He can be reached for questions at 732-280-7550,, & LPL Financial Member FINRA/SIPC.