The so-called “great wealth transfer” is typically depicted as trillions of dollars being passed down over the next two decades from baby boomers born between 1946 and 1964 to their Generation X and Millennial heirs.
But far less attention is paid to another massive wealth transfer: the trillions of dollars passed from husbands to surviving spouses.
A new report from the LIMRA Retirement Income Institute estimates that about $54 trillion will pass from one spouse to another by 2048, with more than 95% ultimately going to women.
Women, on average, live longer lives than men, making them more likely to become widowed later in life. According to the National Center for Health Statistics, women have a life expectancy five years longer than men.
As the U.S. population ages and millions of baby boomers retire, researchers say population trends will simultaneously result in enormous wealth transfers between spouses.
But inheriting assets does not necessarily mean financial security. While some widows will receive substantial inheritances, others will struggle with lower household incomes, reduced Social Security benefits, and difficult financial decisions, all while dealing with grief.
Today, there are about 11.7 million widows in the U.S., and the poverty rate for widowed women ages 65 and older is 15.5%, compared to 10.3% for all adults in that age group, according to the LIMRA report.
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Why inheriting wealth can be financially overwhelming
For many surviving spouses, the biggest challenge is not inheriting the assets, but figuring out what comes next.
“A life insurance check or brokerage statement can make the picture clearer,” TL Turnipseed, head of private foundations at Alta Trust Co., tells Money. “That is rarely the case.”
A spouse’s inherited assets do not all transfer in the same way. Different rules may apply to retirement accounts, life insurance policies, retirement accounts, joint accounts, trust accounts and beneficiary designations – meaning a widow may have to navigate a complicated web of accounts while adjusting to life after her spouse’s death.
“Assets can be governed by beneficiary designation, co-ownership, trust, estate, business agreement, annuity election or retirement plan,” says Turnipseed. “These systems don’t always point in the same direction.”
The financial transition can also be accompanied by a decrease in income. A surviving spouse may lose a Social Security benefit (those of their deceased spouse), see a change in their retirement income, or face increased costs related to health care, taxes, or long-term planning.
While surviving spouses may be eligible for Social Security survivor benefits, they generally only receive the greater of their own retirement benefit and a survivor benefit – not both.
“A big check feels like security, but the household may still be struggling with reduced income,” he says.
The LIMRA report also highlights another challenge: Grief itself can make financial decisions more difficult. The loss of a spouse can impact concentration, memory, and the ability to make complex decisions – making this a particularly vulnerable time to make important financial decisions.
Grief can also make surviving spouses more vulnerable to financial exploitation. According to the FBI, older adults lost more than $5 billion to fraud in 2024. Therefore, it is particularly important for grieving people to have trusted people or advisors involved in important financial decisions.
What surviving spouses should do before making important financial decisions
Experts say one of the biggest mistakes surviving spouses can make is making hasty permanent decisions before they have or understand the full picture of their financial situation.
“Delay anything that is expensive, discretionary, or difficult to reverse in the first six to 12 months, unless a legal, tax, security, health, or cash flow deadline forces the issue,” says Turnipseed.
“This is not because widows or widowers are incompetent. It is because grief measurably affects concentration, memory, risk tolerance and the ability to weigh trade-offs.”
In practice, this means holding back on decisions like the following:
- Selling a house or moving
- Large gifts or loans to family members or friends
- Drastically change an investment strategy
- Purchasing complex financial products such as pensions, nursing care insurance or life insurance
- Making major changes to the estate plan
But waiting doesn’t mean ignoring important tasks either. Some decisions require immediate attention, including claiming benefits, filing insurance paperwork, and understanding tax or estate deadlines.
According to Turnipseed, the first priority is to create a clear picture of household finances. This includes:
- Identify sources of income, recurring bills, automatic payments and short-term debts
- Gathering important documents, including wills, trusts, insurance policies, retirement account statements, and tax documents
- Notify Social Security, pension administrators, insurance companies, and financial institutions to understand available survivor benefits and important deadlines
- Meet with trusted professionals like a financial advisor, accountant, or real estate attorney to help with time-sensitive decisions
Before making any major decisions, Turnipseed says surviving spouses should make sure they can comfortably cover their day-to-day expenses.
“The threshold question is simple: Can the survivor pay normal expenses for the next 90 days without selling assets or making rash decisions?” he adds.
Couples should create their financial plan before they need it
The best time to prepare for this transition is before it happens, says Turnipseed.
One of the biggest risks is having one spouse manage the majority of the household’s finances. If this information is not documented, the surviving spouse may be left trying to make sense of their financial situation during an already difficult time.
Turnipseed recommends creating a “survival roadmap” that includes account information, key advisors or contacts, recurring bills, passwords, locker information, and the location of important documents.
“A survivable plan shouldn’t just say who gets what,” he adds. “It should answer Monday morning questions: Where is the money? How do bills get paid? Who are the advisors? What happens to income when a spouse dies? Which assets pass automatically and which require probate or trust administration? What tax elections or deadlines will be important?”
Ultimately, Turnipseed says every couple should ask themselves one question:
“If one of us died tomorrow, would the survivor know what to do next Monday morning?”
If there is uncertainty or the answer is “no,” he says, “The plan isn’t ready yet.”
https://money.com/widows-great-wealth-transfer/
