When your spouse dies, it likely will be a traumatic experience. Although it is inevitable, the pain and changes it brings to the surviving spouse are going to be considerable. At the same time, drastic changes in income and taxes called the widow’s penalty will occur, and you need to know how to prepare for it.
A Sudden Change in Income
The severity of the change in income depends on several factors, including age, whether or not both spouses were drawing Social Security and other retirement income, are part of it. If both spouses were drawing Social Security, there would be the immediate loss of at least one-third of your income from this source. Once the Social Security Administration (SSA) is notified of the death, payments will automatically be switched to the larger amount, and the smaller one will be dropped.If you are not yet 65, but your spouse was drawing Social Security benefits, you can get their benefits, but it will be reduced according to your age. The AARP says that after you turn 60, you can get benefits between 71.5–99 percent. You can get the full amount of your spouse’s benefits after you reach full retirement age—but you must wait.
