What Happens to the Paycheck When One of You Is Gone?
For most married couples, retirement income comes from two Social Security checks and maybe a pension. When one spouse passes away, one of those checks disappears. The bills? They barely shrink at all.
Something that applies to almost everyone
Here’s something many couples never think about. When a spouse passes, the surviving spouse keeps only the larger of the two Social Security checks. The smaller one stops. Pension payments may drop or end too, depending on the choice made at retirement.
But the mortgage, the property taxes, the insurance, the utilities, and the groceries don’t get cut in half. The house costs the same to run whether one person lives in it or two.
So income can fall by a third or more, while expenses fall by a little. That math catches a lot of families off guard, and it usually happens at the most emotional time of their lives.
Meet Bill and Carol
Bill and Carol are both 66. Together they receive $5,600 a month: Bill’s Social Security of $3,200, Carol’s of $2,400. Their monthly spending is $5,000, so they’re comfortable.
Then Bill passes away. Carol keeps Bill’s larger check of $3,200 and loses her own $2,400. Her income drops from $5,600 to $3,200 a month.
Her spending, meanwhile, drops from $5,000 to maybe $4,300. The house is still there. The property taxes are still due. Now there’s a $1,100 monthly gap, or $13,200 a year, and Carol may have 20 years or more ahead of her.
She wasn’t careless. Bill wasn’t careless. They just never planned for what the paycheck looks like with only one of them.
The good news
This is one of the most fixable problems in retirement, but only if you plan ahead. The key is to look at your income as a plan for both of you, not just for the two of you today. When you build income for life that continues for the surviving spouse, the paycheck keeps showing up even when the household changes.
It’s one of the kindest things you can do for the person you love.
Where do you stand?
Don’t leave this question for someone else to answer later. Click the link below to use our free calculators and see your own numbers in minutes.