It might sound like a stretch to take personal finance lessons from a first lady who lived 150 years ago. But the financial aspects of the story of Mary Todd Lincoln, as told through Ford’s Theatre’s play, “The Widow Lincoln,” might feel familiar to modern consumers. The play, which just ended its run at the historic theater in the District of Columbia, explores the days after President Lincoln’s assassination, when Mary struggles to regain her sense of identity and live amid her grief.
As her character, played by Mary Bacon, faces dozens of unpaid bills for home furnishings, clothes and jewelry, she asks, “How will I ever pay these debts? I am nothing. I am no one.” On top of moving out of the White House, mothering her sons and moving forward with her life, Lincoln mustdeal with all these financial stresses. She no longer has her husband to rely on for emotional support, income or an identity.
It’s a crisis many women in the 21st century face, too. Becoming a widow often means learning how to manage finances on your own, experiencing a decrease in income and, of course, facing debilitating grief at the same time. That’s why financial advisors generally recommend participating in money management throughout marriage and preparing for the possibility of one day being on your own — as most women eventually are, because of divorce or death.
Alexandra Armstrong, a financial planner in the District of Columbia and author of “On Your Own: A Widow’s Passage to Emotional and Financial Well-Being,” urges women to know their money thoroughly, regardless of life stage. She also suggests keeping all financial paperwork, including estate planning documents, well-organized and easily accessible so you can get to it when you need it.
The Hartford Financial Services Group recommends that couples be able to answer these three questions long before retirement, just in case: If my spouse were to die, how would that affect the household’s income? What would an expensive illness do to our retirement savings? If either spouse were to die, would the survivor be prepared to take over the management of the finances?
The group also recommends that both spouses have a basic understanding of monthly costs, saving and investment strategies, and how to quickly access funds if necessary. (Making sure both names are on accounts can also help.)
Financial advisors can assist, although many women complain that advisors do not address their needs or make them feel comfortable, which is why so many widows replace their financial advisor after their husbands’ death. The financial industry is working to remedy that problem with more outreach to women clients, long before they become widows.
Here are three more tips for widows, or those who might one day take on that identity:
Replace lost income. Pension, Social Security and salary losses can be offset with life insurance proceeds or other sources of money. Term life insurance, especially for young, healthy people, is relatively cheap, so it can make sense to lock in a 20- or 30-year policy before you reach middle-age. To calculate how much life insurance to take out, you can use a general rule of thumb, like 12 times your income, or add up all the costs you would want to be able to cover.
Find your “trusted person.” Catherine Collinson, president of the Transamerica Center for Retirement Studies, says single seniors need someone who is able to make financial decisions for them in case they become unable to. She has served as her grandmother’s “trusted person,” as she calls it, ever since her grandfather passed away. Her grandmother also added her name to all her bank accounts to make it easier for Collinson to access and manage them in case of an emergency. As a result, when her grandmother had a stroke at age 92, Collinson was able to easily step in to pay her grandmother’s bills and manage her accounts.
Manage risk. Studies show that women tend to invest more conservatively than men, which means spouses tend to balance each other out. That can also mean that when women become widows, they tend to be overly cautious in their investments, which opens them up to inflation risk. If they are 100 percent invested in bonds, for example, they could outlive their savings. Widowers have the opposite problem and tend to invest too aggressively. To compensate for these tendencies, financial advisors can help both men and women take a more balanced approach.
Financial advisors also generally recommend holding off on any big moves during the first year following a spouse’s death, since the grieving process can interfere with good decision-making. As the play “The Widow Lincoln” makes clear, Lincoln could barely manage day-to-day tasks. She famously was not willing or able to leave the White House for more than a month after her husband’s death. Mary Todd Lincoln’s story might be 150 years old, but it contains financial lessons that are still relevant today.
More from U.S. News
50 Ways to Improve Your Finances in 2015
13 Money Tips for Married Couples
Modern Money Lessons From Mary Todd Lincoln originally appeared on usnews.com
