Financial Help for Widows

About Debt Help for Widows

Losing a spouse can turn your life upside down. Aside from grief, a major challenge is loss of income. There are many places widows can find financial help – government and nonprofit – including “free money.”

There were more than 11.6 widows in the U.S. in 2021, according to the U.S. Census (there were about 3.5 million widowers), with the median age just under 60. Many of those who’ve lost their partner struggle to pay the bills.

The poverty rate for women-headed households – whether widowed, divorced or single – was 23.4%, as opposed to 11.4% for men. Women more frequently have a lower average income and much higher likelihood of having children to care of.

The financial issues are compounded for widows, many of whom lose much of their income when they lose their spouse. Household income for widows declined an average 37% when their spouse died. Men lose an average 22%. Women of color and those over 65 suffer an even bigger financial impact from widowhood and are more likely to fall below the poverty line.

“Life can suddenly get very expensive,” said Larry Kotlikoff, author of “Get What’s Yours – the Secrets of Maxing Out Your Social Security Benefits.” .

“The surviving spouse has to deal with electricity, food, cars, maintenance and all the other day-to-day living expenses that don’t change, but they’ve only got one income to throw at it.”

There are options, though, that can help widows with financial challenges.

Finding Financial Help for Widows

Widows looking for financial help and free money should start with the basics. Don’t limit yourself to help that’s targeted for widows. Take your financial situation into account and research anything that can make it better, from government benefits to nonprofit debt management. Know the restrictions of programs as well. Some, particularly those for veterans’ spouses, end if you marry again.

Top sources of continuing financial help for widows:

Social Security is the prime benefit available for widows. A surviving spouse can claim whichever is greater, their own benefit or the spouse’s. Because men earn more over a longer period, their benefit often is higher.

If your spouse was still working, check with the employer’s Human Resources department to find out if there was a 401(k) account, life insurance, health savings account or other benefit. HR departments may not contact you if there’s a benefit available, so it’s important to check.

The Department of Veterans Affairs has many benefits for surviving spouses and dependents of veterans. Some have income qualifications or other restrictions. To get a start, visit va.gov/family-member-benefits.

Financial Help for Widows from Family

Family members can be a great source of help, but keep an eye out for the pitfalls.

If a family member offers money, be sure that both you and the giver understand the terms. Most monetary gifts are taxed, even if it’s to help a struggling widow. Loans from family can be a slippery slope even in the best of circumstances.

If an adult child offers money, widows can get up to $15,000 tax-free from a child. If the child is married, the limit is $30,000. Gifts from other family members will be counted as income, and taxed.

If you borrow money from a family member there are no tax implications, but be sure that the repayment terms, including interest if they charge it, are in writing. Do this even if it feels uncomfortable. When both sides understand the terms, future headaches, including different memories of what was said, can be avoided. The paperwork will also help if your taxes are audited – you can prove it was a loan, not a gift.

Family members can also be able to help in ways that aren’t financial, but can still ease the pressure.  When people ask, “What can I do to help?” don’t be afraid to be specific. Pre-cooked meals, groceries, baby-sitting help, rides to appointments, help filling out forms or calling government agencies, adopting your pet – there are lots of ways family can contribute. People are often at a loss as to how to help. Let them know.

Online Financial Assistance for Widows

There are many online sources of financial help for widows, from free money, to benefits, to help for the children.

Government Benefits for Widows

Benefits.gov is a place widows looking for government help can start. An online form determines what assistance you qualify for. Benefits include things like SNAP (Supplemental Nutrition Assistance Program), which was formerly known as food stamps; TANF (Temporary Assistance for Needy Families), Medicaid and Medicare information; LIHEAP (Low Income Home Energy Assistance Program); rental assistance, and more.

Aging.gov has a variety of resources and information for people over 65.

The Social Security Survivor Benefit is paid to a spouse and dependents of someone who paid Social Security taxes through their employment. The amount is based on their income. Funeral homes generally report the death to the Social Security Administration — when you make arrangements with a funeral home, they’ll ask for your spouse’s Social Security number. If you do not receive the benefit, you must report the death to the SSA in person, it can’t be done online.

General Assistance. If your state is one the 25 that offers GA, you may be able to get financial help for immediate needs, like utilities, heat, food or burial costs. Often it’s money you don’t have to pay back. Contact your town or city clerk to see if GA is available and what the restrictions are.

Charities and Organizations for Widows

There are many nonprofit organizations that provide financial help to widows. They can be as close as your local church or be a national foundation you’ll find online. Help may be in the form of a one-time grant for food or rent, or resources and support groups that will help you find your footing, financial and otherwise.

Most organizations, even churches, have a website that spells out how they can help. Don’t discount organizations like the St. Vincent de Paul Society, Catholic Charities or the Salvation Army. Local Hospice organizations also have grief support groups, a good place to talk to people in the same situation who may know of resources.

National organizations that are specifically designed for widows include the Hope for Widows Foundation, Wings for Widows, Widows Connection and The Sisterhood of Widows.

If you are overwhelmed by debt, the answer may be reaching out to a counselor at a nonprofit credit counseling agency, like InCharge Debt Solutions. Counseling is free, and counselors are required to give you advice that’s in your best interest. Be sure the agency you talk to is accredited by the National Foundation for Credit Counseling. Be savvy about organizations that may try to take advantage of your situation. The NFCC has tips on how to be sure you’re connecting with a legitimate nonprofit agency.

What Happens to Your Home When Your Spouse Dies?

If you and your spouse co-signed the mortgage, it’s now your responsibility and you must continue to pay it.

If your spouse’s name was on the mortgage, but yours wasn’t, you will likely inherit the house, even if there’s no will. If your spouse’s assets can cover what is owed on the house, the executor may use them to pay off the mortgage.

In any case, if your spouse dies, the lender cannot legally demand the entire amount due. But the mortgage still must be paid. It’s not forgiven in the case of the borrower’s death. If payments aren’t made, the lender can foreclose.

If you are having trouble keeping up with payments, ask the lender if they have a hardship program, or if there’s insurance on the mortgage that can pay off the balance.

Refinancing the mortgage is another option, resulting in a lower monthly payment, but also a longer payoff period.

Widows 62 or older can get a reverse mortgage. This allows you to borrow on the equity of your home – you must owe less than half of its value – and you don’t make payments until it’s sold. When the home is sold, the mortgage, with interest, is paid in full through the sale.

Another option is to sell the house. If there’s enough equity, it may cover what’s owed.

What Happens to Credit Card Debt When Your Spouse Dies?

Who pays on credit card debt when your spouse dies depends on where you live and how you and your spouse managed finances.

If your name was on the credit card account as a co-signer (a joint account), you’re responsible for paying the balance, even if you didn’t use the card. Nonpayment will go on your credit report and have a negative impact on your credit score. It eventually will go to a collection agency.

If your name was on the account as an authorized user, rather than a joint account, you are not responsible for the debt unless you live in a community property state. The debt will have to be paid out of your spouse’s estate, if money is available.

If you live in a community property state – Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin – you may be liable for your deceased spouse’s credit card debt, even if it wasn’t a joint account. Each state handles community property differently, so you may want to consult a lawyer who will help you figure out your financial obligation.

Financial Assistance for Widows of Veterans

The Department of Veterans Affairs’ Office of Survivors Assistance has information on benefits and services for widows of veterans, and their dependents.

VA benefits for widows include:

• Dependency and Indemnity Compensation (DIC). A tax-free monthly payment for surviving spouses, children and parents of service members who die in the line of duty or from a service-related injury or illness.
• CHAMPVA health care. Civilian Health and Medical Program VA covers some health care costs for spouses and dependents of veterans who are disabled, died of disability or died in the line of duty.
• Two scholarships for spouses and dependents of veterans who died, or were disabled, in the line of duty are Survivor’s and Dependents’ Educational Assistance and the Fry Scholarship. There are a huge variety of other scholarships offered by many organizations. U.S. Veterans Magazine has compiled a list.
• VA Fiduciary Program. Help for veterans, spouses and dependents who can’t manage their finances because of medical issues or disability.
• VA-guaranteed home loans. Eligible spouses are guaranteed a low-interest loan through a private lender to buy a home or make repairs.
• VA Survivors’ Pension. Monthly payments to low-income surviving spouses and unmarried dependents of veterans who served during wartime. There are income and asset requirements.
• Burial benefits. The VA offers a free burial plot, and services that go with it, to veterans and spouses in one of the many veterans’ cemeteries across the country. The VA also has a burial allowance that reimburses some cost of burial in a non-VA cemetery.
• Life insurance. The VA has a variety of life insurance programs for veterans, spouses and dependents.
• Bereavement counseling. Free grief counseling for spouses, children and parents of active military who died while serving.

Private Help for Widows of Veterans

The Tragedy Assistance Program for Survivors (TAPS) offers retreats, expeditions and survivor seminars around the country and world for grieving members of military members who have died.

The Wounded Warriors Project, an organization that helps disabled veterans, also has assistance and resources for surviving families.

Tips for Widows Dealing with Social Security

Social Security benefits are the financial go-to for widows, dependent children and those who reach retirement age, but getting your benefits can be complicated.

You can receive your own, or your spouse’s, benefit, whichever is higher. If your spouse began receiving Social Security benefits before death, don’t cash the checks if they continue to arrive. You will have to pay it back.

The best way to apply for a survivor’s benefit is to visit a Social Security office in person. Be sure to call ahead for an appointment.

Those applying for benefits must bring the originals – not photocopies — of their spouse’s death certificate, birth certificate, marriage certificate and proof of U.S. citizenship. A photocopy of a W-2 form or self-employment tax return is also required.

Widows can start getting the Social Security survivor’s benefit at 60, but it is reduced by a fraction of a percent for each month before full retirement age of 70.

Widows who qualify for survivor’s benefits and a retirement benefit that’s more than the survivor’s benefit can switch to their own benefit any time between age 62 and 70.

» Learn More: Living on One Income

Does Social Security Save Widows?

Since claiming your spouse’s benefits is not easy, author Kotlikoff advises widows who need financial help to make sure to take advantage of other resources as well, and to be prepared.

“Social Security benefits definitely help, but not nearly as much as people would want,” he told InCharge.org. “There are all sorts of gaps in the system and ways you have to deal with them to get what you deserve.”

He said that widows should not put off figuring out what their Social Security benefits will be. The sooner they get a handle on it, the easier it will be to avoid poverty.

Widows should also make a lifetime budget plan as early as possible. “Figure out how much you’re going to need to maintain the lifestyle you want to lead and then look at your expected benefits from Social Security, life insurance, retirement plans, pensions – anywhere you expect to get money – and see if that’s going to support it.

People usually underestimate how much they will need. “You can get hurt very badly if you screw this up,” Kotlikoff said.

» Learn More: Can Creditors Garnish Social Security?

Widows Financial Problems Get Worse with Age

The combination of a lifetime of working for less money than men and losing work time to raise children is a large factor as to why women receive lower Social Security benefits and 401(k) or company pension plan for retirement savings.

Kotlikoff said that’s why so many widows end up below the poverty line as they get older. A 2021 federal study found that 20% of people 65 or older had incomes of less than $15,000. Another 21% had incomes between $15,000 and $24,999.

Cindy Hounsell, president of the Women’s Institute for a Secure Retirement, said some of that can be avoided with communication and proactive financial management. “By the time they get to their 80s, a lot of women are near poverty because they never had the discussion with their husband about, ‘What’s going to happen to me if you’re gone?’” she said.

Since women have a longer life expectancy than men, Hounsell founded WISER to help women plan for a time they will be solely responsible for their finances.

“Odds are that if you’re a woman, you’re going to be going it alone at some point late in life,” she said. “Unfortunately, a lot of them don’t know where the money is, where it’s supposed to be coming from and how to manage money on their own, so when their spouse dies, they don’t know what to do.”

Additional Help for Widows

Financial struggles only compound the stress of dealing with losing a spouse.

Widows can contact a nonprofit credit counseling agency like InCharge Debt Solutions to connect with a counselor who will discuss ways to deal with a new financial situation. Counselors can help create a budget, find ways to reduce expenses and suggest resources that offer assistance for things like housing and utilities.

Nonprofit credit counselors may suggest a debt management plan to help shrink unsecured debt, particularly credit card debt. InCharge Debt Solutions counselors work with creditors to lower interest rates. The program consolidates monthly debt into one fixed payment to the agency, which makes the credit card payments. It takes 3-5 years to complete and the monthly payment includes a $40 fee.

The counselor may also suggest InCharge’s Credit Card Debt Forgiveness program, also called Less Than Full Balance. You pay 50-60% of the credit card balance in fixed payments over 36 months. What’s left after that is forgiven. To qualify, creditors must be on the participating list of creditors, banks, law offices or debt collection agencies; the account must be charged off (you haven’t made a payment in more than 120 days); and the balance must be at least $1,000.

There’s a lot to think about when you lose a spouse. Getting help sorting out your finances could help ease your stress as you figure out your new normal.