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Preparing for the loss of a spouse.

The loss of a spouse is a traumatic and life-changing event. In my seminars and individual retirement counseling, I encourage married couples to prepare for the day when there is only one of them instead of two.

Decisions made at retirement can have a significant impact on a surviving spouse, yet it’s hard to imagine and difficult to think through the options. It isn’t easy to figure out where to begin since it’s hard to know exactly what the future might hold in terms of health, finances and other factors. It’s challenging enough to prepare for retirement when you and your spouse are alive and well, let alone trying to figure out what happens when one of you passes away.

There are some simple steps you can take now to reduce the burden on your family when the time comes to do the paperwork and make the changes that need to be made.  Because when that time comes, the surviving spouse is likely to be overcome with the shock, grief, numbness, sadness and fear that is part of the process of mourning. 

My dear friend Georgia recently experienced the tragic and untimely loss of her husband, who was only 59 years old. Andy was a federal employee who was planning to retire in a few years. He had already retired from a distinguished career as a county firefighter. Georgia is a federal retiree herself and has learned the hard way about things she and Andy  could have been done earlier to make what she has dubbed “the business of death” a little easier to bear.

Georgia recommends that everyone take the time to put together their personal and financial information in an organized, accessible way. The National Active and Retired Federal Employees Association provides a document called “Be Prepared for Life’s Events” that includes advice on how to do this. It’s critical that in the event you or your spouse dies, you are able to access the names, addresses, claim numbers, documents, account numbers, passwords and other pieces of information that will be needed to transfer benefits, pay bills and claim inheritances.

Unfortunately, Andy had not organized this information for Georgia. This has led to many unpleasant surprises as she attempts to unlock bank accounts, credit card information, and cell phone plans. Only three weeks after Andy’s passing, she got an unpleasant phone call from the credit union that had provided him a loan to purchase a truck earlier this year. Since the truck was in his name, she was threatened with repossession of the vehicle unless the loan balance was paid immediately. She thought she’d have more time to figure out what to do. 

Of course, Georgia and Andy did many things right. She’s grateful that he maintained life insurance and they provided for each other by choosing spousal survivor benefits when she retired from federal service and when he retired from his county job.

Georgia has now requested that her Civil Service Retirement System benefit be restored to the unreduced amount, so she will receive her full retirement benefit retroactive to the date of Andy’s death. In addition, she has completed the paperwork to change her beneficiary designations for her government life insurance, Thrift Savings Plan account and CSRS retirement benefit.

Georgia also needed to change her health insurance from self plus one enrollment to self only. Her late husband’s employer sent representatives from human resources to her home within a few days of his death and helped her complete the necessary forms to release the lump sum death benefit from his retirement coverage under the Federal Employees Retirement System, along with Federal Employees Group Life Insurance proceeds and the transfer of the funds in his TSP account to hers. 

Georgia will not be entitled to widow’s benefits from her late husband’s Social Security record because those benefits will be offset by two-thirds of her CSRS retirement under Government Pension Offset provisions. She will, however, receive a one-time funeral payment of $255 fromSocial Security. The total funeral expense was closer to $10,000.

Georgia is also glad that she and Andy had made an appointment with an estate planning attorney last year and completed the funding of a family trust and had durable powers of attorney and medical directives completed.

There is much work still to be done. Joint accounts must be closed and replaced with accounts in her name only. Tax issues must be tackled, such as which benefits she is slated to receive are taxable. This includes the FERS basic employee death benefit. She can choose to take it in a single lump sum payment or receive it over 36 months to spread out the tax burden. 

Georgia will need to make an appointment to update their trust documents and her will. She will also have to change gears and set new goals for her future as a surviving spouse, deciding where she will live and what she will need to get through the process of grieving her loss.

If you’d like to hear Georgia talk about her federal service, retirement and going through the loss of her life partner, listen to “Federal Retirement: A Personal Story” on Federal News Network.