How to look after your spouse after you're gone

If you're married, it's almost inevitable that you or your spouse will die first. Unfortunately, many married couples overlook this basic fact of life when planning for retirement.

This is particularly troublesome for women, as noted recently by the Boston College Center for Retirement Research (CRR) in pointing out that widows tend to face more financial adversity than widowers. A well thought out retirement plan ensures that the surviving spouse has enough retirement income and other financial resources to last the rest of his or her life.

When it comes to married couples in the U.S., most husbands are a few years older than the wife. As a result, most wives can expect a period of widowhood that lasts five to 10 years or more, given that women tend to outlive men by three to five years. Because there are many circumstances and marital situations that change that pattern, including same-sex marriages, you should plan to make sure that either partner will be secure after the first spouse passes away.

Here are five steps that will help widows and widowers alike (though they're particularly critical for wives):

Step 1: Optimize Social Security claiming. It's usually best if the primary breadwinner, often the husband, delays starting Social Security benefits as long as possible, but no longer than age 70 (when there are no more credits for delayed retirement). The reason is that the surviving spouse will typically receive the Social Security income that the primary breadwinner was receiving, reflecting the credit for delaying the start of benefits. This is one important way to boost the retirement income of the surviving spouse.

Special note for same-sex marriages: Social Security now recognizes legal same-sex marriages when determining eligibility for surviving spouse benefits.

Step 2: Elect joint-and-survivor pension or annuity benefits. A joint-and-survivor annuity is a common feature in traditional pension plans and in annuities that you can purchase from an insurance company. Pay close attention to the amount of income that's continued to the surviving spouse. The Center for Retirement Research points out that with the common 50 percent joint-and-survivor option in many pension plans, the income is reduced by 50 percent if the worker dies first, but it's not reduced if the nonworking spouse dies first. To address this problem, most plans allow the worker to elect a higher continuation percentage, such as 66, 75 or 100 percent; it's a good idea to consider one of these higher continuation percentages.

Step 3: Develop a thoughtful drawdown strategy for retirement savings. More retirees nowadays are retiring with 401(k) and IRA accounts that don't provide lifetime retirement income. As a result, you should consider your retirement savings as a generator of a lifetime retirement paycheck that should last as long as either spouse is alive. There are several methods you can use to achieve this goal, each having their own pros and cons. Take the time to learn the method, or combination of methods, that work best for your circumstances.

Don't make the common mistake of viewing your retirement savings as a piggybank that you can use to withdraw whatever amount you need for current living expenses without a plan to make your savings last for the rest of both of your lives. Many people draw out their savings too quickly, with the unfortunate result that you -- or your surviving spouse -- experiences "money death" before physical death.

Step 4: Develop a strategy for long-term care expenses.. It's common for the older spouse (often the husband) to require expensive long-term care and then die, leaving the surviving spouse (often the wife) emotionally and financially drained. Everybody needs a strategy to address the threat of potentially ruinous long-term care expenses for either spouse. Don't make the frequent mistake of assuming that this threat doesn't matter because it's so far away in the future.

Step 5: Plan together. One spouse often takes on the responsibility for most of the retirement planning. This is a big mistake, because what happens if that spouse dies first? Even if you work with a retirement planner, it's important that both spouses understand the retirement planning strategies so they can take over if the other spouse dies first.

As you approach your retirement, it's only natural that you're focused on your impending freedom and all the fun things you've been waiting to do in retirement. It might be scary and depressing to plan ahead for the death of your spouse. But you're likely enjoy your retirement more if you know your spouse will be secure after you're gone.

  • Steve Vernon On Twitter»

    View all articles by Steve Vernon on CBS MoneyWatch»
    Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.