Life Changes

Expert offers financial advice for the recently widowed

Kathleen M. Rehl, Special to
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I share an identity with 12 million American women and I must admit I don't enjoy it. I am a widow.

Becoming a widow was terribly devastating for me. Widowhood is a heartbreaking event that happens to almost 1 million women each year. My 60th birthday was just a month before my husband passed. I fit the norm. The U.S. Census Bureau reported that in 2011 the median age of widowhood was 59.4 for a first marriage and 60.3 for second marriages.

It's a fact that women live longer than men. Indeed, half of surviving spouses over age 65 will outlive their husbands by 15 years. That means there are many years ahead to be responsible for household financial decisions.

Making matters more complicated, the death of a spouse unleashes a deluge of financial tasks. Many widows aren't as familiar with investing, insurance policies, taxes or estate planning because in most cases the husband handled all these financial matters.

(Read more: Widow nearly loses home)

Sadly, even in cases when the widow handled the family money matters, she's likely to be engulfed in grief and despair at first. This can result in financial matters being placed on the back burner.

In early widowhood, a widow's grief can parallel what seems to be a brain freeze. For many new widows, memory is weak, attention span is short and decision-making is downright difficult.

For me personally, I didn't remember my Social Security number. I couldn't recall where I put my car keys. I wondered if I was going crazy. I wasn't. It was just a normal part of being a new widow.

Widows can face a double whammy after their husband's death if their knowledge of financial matters isn't strong and their emotions are raw.

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Here are my five suggestions on steps someone should take following the death of a spouse:

1. Do not rush into major irrevocable money decisions right away. With important financial choices ahead, speed can make a mess of things. When you are in the midst of grief and mourning, your brain functions differently. Wait until your cognitive functions return to normal to make big decisions. For example, don't buy or sell investments you don't understand. Rather, focus on financial triage activities. This includes reviewing your money flow situation, making sure bills are paid, filing for death benefits and maintaining enough cash liquidity. Save major decisions for later. For example, if you receive a life insurance death benefit, park it in a safe money market account and later think about how you need to use this money before you invest it.

2. Watch out for financial wolves who will prey on widows. Unscrupulous financial salespeople may take advantage of women after their spouse dies. My elderly widowed aunt was sold Iraqi dinars by "a nice young man who was the nephew of my friend from church." That financial wolf convinced her to buy the Iraq currency. He told my aunt she would double her money with this investment, to earn much more than her certificates of deposit. In return for her cash, she received an official-looking signed "certificate of authenticity" along with the colorful dinar currency. But my aunt never received one penny back. She tried to contact this scam artist later, but he skipped town ... obviously looking for other vulnerable widows elsewhere.

3. Make house decisions carefully. Although it might be tempting to move in with an adult son or daughter across the country to ease your loneliness, don't leave your home and community right away. Your major support network, social circles and medical providers are nearby. Indeed, you might experience secondary grief if you relocate, following the grief you already feel after your husband's death. Some widows stay in their house and want to pay off the mortgage immediately with death benefits. Wait. Keep cash available for the near-term needs, while making decisions about your new life ahead.

(Read more: Downsizing for retirement)

4. Get an objective review of your finances. Family or friends may give you advice without knowing your entire situation. Practice saying, "Thanks for your suggestions. I'll take your ideas into consideration." You may need unbiased guidance from someone who can evaluate your financial position and provide objective, comprehensive suggestions. When you're thinking more clearly, you'll want to review all your investments to determine what adjustments are needed. What may have been good for you and your husband before might not be appropriate now. It's common for new widows to wonder if they will become "bag ladies," even if they've got plenty of money. A very common question of new widows is "will I have enough?" Getting a realistic understanding of your financial net worth and looking at sources of cash coming in and going out will be helpful.

Some widows can benefit by speaking with a financial advisor about their situation. This qualified professional can be a "thinking partner," helping you make decisions—someone who listens with empathy and respect, whom you trust. Your advisor should be experienced in working with widows and have an accepted professional designation. The most acknowledged credential is the Certified Financial Planner (CFP) status. Select an advisor who puts your interest first as he or she provides unbiased and holistic advice. Many experts recommend fee-compensated advisors.

(Read more: Do you need a retirement coach?)

5. Don't be a purse for others. Women may be approached by family members asking for part of their inheritance early. For example, one of my client's stepsons demanded that his father's widow give him money to buy a new car. He played on her emotions, saying, "If Dad were alive, he would help me now." Be firm and don't give in to pressure like this. If you later decide to date again, be careful about a potential partner looking for you to be a purse providing money. Widows need to be careful about intentions of those who consider them a soft touch. Keep money matters to yourself, at least until you know the other person very well.

Kathleen M. Rehl, Ph.D., is a certified financial planner and the author of "Moving Forward on Your Own: A Financial Guidebook for Widows."