Mary Johnson answers many questions from members of the Senior Citizens League and every now and then one will jump out at her that she believes will benefit others.
Like this one she recently received: What is the financial impact of widowhood? Johnson, Social Security and Medicare policy analyst for the Senior Citizens League (TSCL), said the member told of becoming a widow in 2019 and being informed by the Social Security Administration shortly thereafter that she would begin to receive her husband’s benefit and would lose hers. The problem, however, was that the year after her spouse's death, she was placed in the single filer tax rate bracket. That caused her to lose thousands of dollars—mainly because she was not a “qualified widow.”
The qualified widow or widower tax filing status allows a surviving spouse to retain the married status on their tax return. But the survivor, among other conditions, must remain unmarried for at least two years following the year of the spouse’s death or have at least one dependent child to qualify for the tax status. The member did not have any dependents.
“It was a big adjustment, one that she was just learning about,” Johnson said. “She did not feel it was fair and that it was good policy because it put her in a much more vulnerable situation.”
Johnson said while this member was able to explain her situation and point to specifics, many other seniors are not able to articulate about lost benefits. “I really feel women need to be better equipped with financial information,” she said. “If they have relied on a spouse to do it all, that cannot be helpful if you become widow.”
Johnson, 70, said that though she was not trained in financial matters, it is something she has studied, read and solved much of her adult life. “I feel that I have done well with my investments because I have researched and managed my own portfolio and I know I have done better than [some] advisors,” she said. But she noted that not everybody has that ability to read and do analysis “I know I am an exception that way.”
Still, it is important for people to seek information because issues involving long-term retirement planning are complicated, Johnson said. “It’s not just finances, it’s also legal, it’s also taxes, and it’s important to get all three angles.”
But for many seniors, there is no structured way to get financial information, counseling and retirement advice, Johnson said, noting that TSCL’s senior center on occasion brings in financial advisors from different companies to give presentations on certain topics, and there are courses available through their learning program. “But there is a real lack of where the ordinary middle- to modest-income retiree can go to get advice,” she said.
As for what to expect if you become a widow or widower, Johnson highlighted four of the most common changes survivors will encounter:
• Benefit Check Return. Any Social Security checks received for the month of your spouse’s death or thereafter must be returned, even when the death was on the last day of the month. Johnson explained that if your spouse passed away in September, the September benefit is the check received in October. That money must be returned to the Social Security Administration, even if you were dealing with piles of medical bills in your spouse’s last month of life. And the benefit must be returned the same way the deceased received it. It is also important to note that the agency only accepts the death information from the funeral home.