5 Financial Challenges to Navigate After a Spouse’s Death

What to do: Contact Social Security to find out what survivor benefits you can claim. Call several times to make sure you’re getting consistent guidance, advises Lexington, Kentucky, financial planner Melody Townsend. (A Social Security representative misinformed one of her clients.) Some people might be better off claiming their own retirement benefits first and delaying survivor benefits; for other people, the reverse might be true. You may want to hire a financial planner to help with your claiming strategy, or use one of the free or low-cost claiming calculators at maximizemysocialsecurity.com, ­opensocialsecurity.com or troweprice.com/socialsecurity. Ryan took her survivor benefit before FRA and plans to switch to her own retirement benefit at age 70, when the amount maxes out. “Your claiming strategy needs to be based on your own financial circumstances,” says Tom Belding, a financial planner in Chatham whom Ryan consulted.

You’ll likely pay higher taxes

Surviving spouses often face a so-called widow’s penalty — paying taxes at higher rates, even though their income may drop after the death of the spouse. A key reason is the status shift from married filing jointly to single filer. (You can still use married filing jointly status in the tax year of the spouse’s death.) “Single filers have tighter brackets,” says Mark Luscombe, a CPA and principal analyst at Wolters Kluwer Tax & Accounting. For example, a married couple filing jointly with $75,000 in taxable income would fall into the 12 percent federal tax bracket in 2025, while a single filer would land in the 22 percent bracket.

There are a couple of exceptions. If you have minor dependents, you have a two-year period when you can still file at joint rates. And if you are caring for older or disabled relatives, you may be able to file as head of household, which is a bit more favorable than single-filing status, says Luscombe.

Adding to the tax bite, your standard deduction will be cut in half. Married couples filing jointly receive a standard deduction of $30,000 in 2025, but single filers get a standard deduction of just $15,000; those numbers are higher for people 65 and older.

What to do: Talk to a tax adviser or other financial professional after your spouse’s death. (A “fee-only” financial planner will charge only for advice and won’t be motivated to sell you particular financial products.) “There may be tax opportunities that present themselves,” says Gary Schatsky, a financial adviser and attorney in New York City. Through planning, you might be able to improve your financial situation and reduce your tax liability. You may also want to take advantage of your lower married-filing-jointly tax rate, while you have it, to pull money from your 401(k) or IRA. That could reduce future required minimum distributions (RMDs).

The tax break you get on the sale of your home may shrink

When selling a jointly owned home, couples may be able to exclude $500,000 in profits from income. As a survivor, you have to sell the home within two years of your spouse’s death to claim that $500,000 exclusion. To be eligible, the couple must have owned and lived in the home at least 2 out of the 5 years preceding the death.

After that, you can apply only your share of the exclusion, or $250,000, if you sell. Still, at least half the home will get a so-called step-up in cost basis after the spouse’s death, which will reduce the amount of profit and tax on gains, says Luscombe. (In community property states, both halves of the home get this step-up.) To make sure the cost basis is adjusted for capital improvements, such as a new roof or addition, you’ll need detailed records.

What to do: Taxes are only one consideration when it comes to where you want to live. If you can continue to maintain your home, and you prefer to remain where you are, that may be your best option. And if you’re planning a move, take the time to research your choices. “There are costs to relocating, and finding another affordable home may be difficult,” says Stacy Francis, a financial planner in New York City.

Your credit score may get dinged

When couples jointly use a credit card, one spouse is generally the primary account holder and the other is the authorized user. Typically the account is canceled when the bank learns of a cardholder’s death, so it’s a good idea for each spouse to be the primary account holder on at least one credit card.

Surviving spouses may see a slight drop in their credit score; a 2023 study conducted by researchers at Ohio State University found an average drop of 10 points among the recently widowed. “The bigger threat to your credit is late or missed payments,” says Emily Green, head of wealth management at Ellevest, a women’s financial planning firm. Those late or missed payments could cause a sharp drop in your score, and they will also remain on your record for seven years.

What to do: Ideally, you’ll have an up-to-date record of your spouse’s financial information, including account numbers and passwords, which will let you stay on top of bills. If that isn’t so, you’ll need to check on any debts or required payments by combing through bank statements or calling companies.

You’ll become a target for scammers

“Fraudsters often search for the names and addresses of widows or widowers in probate documents or obituaries,” says Marc Lescarret, a financial planner in Rockaway, New Jersey. A criminal may reach out to you via phone, text, email or official-looking postal mail. Common tactics include pretending to be a Social Security employee who needs your personal information to prevent your payments from stopping, telling you that you’ll have to make a premium payment in order to collect on a life insurance policy, or claiming your deceased spouse owed a debt that must be repaid. Having lost a life partner, you may also be susceptible to romance scammers.

What to do: “Put financial safeguards in place,” says Lina Supnet-Zapata, an aging-life care manager and private professional guardian in Austin, Texas. Freeze your credit account at the three major credit bureaus ​(Equifax, Experian and TransUnion). Screen your calls. Be skeptical of unsolicited pitches, especially those seeking personal information or money, or offering you an investment opportunity. For messages that seem legitimate, call the provider directly using the contact info in your account statements, not the contacts supplied in emails, texts or over the phone. If you suspect a scam, call the AARP Fraud Watch Network Helpline (877-908-3360).