How losing your spouse or civil partner could affect your financial plan

Losing your spouse or civil partner is an unthinkable event. But being prepared, by understanding how your financial plan could change, may help you cope.

You might find it hard to think about losing your spouse or civil partner, but being prepared for this eventuality could help you cope during this exceptionally difficult time.

Indeed, during the immediate aftermath of a partner’s death, tackling financial matters such as taking over the mortgage repayments and transferring household bills into your name, could feel overwhelming.

Yet, it’s important that you take practical steps to protect your financial future – and that of any dependents you have.

Read on to learn about some of the important ways your finances could change when you lose your partner, so that you know what to expect and are ready to take control of your wealth.

Your household income could fall

If your late spouse or partner contributed to the household expenses, you may need to adapt your budget to suit a single income.

Unfortunately, the cost of living is higher for a single person – it’s not automatically half the cost of living as a couple. Figures published by Just4One (28 May 2024) have revealed that in 2024, the average person living alone in the UK spends around £6,808 each year on household bills, compared to a couple living together who split an average of £8,181 in bills between them.

If you live alone, you’ll be solely responsible for all your household expenses – such as your mortgage, utility bills, and protection. These costs may remain broadly similar to when you shared your home with your late partner.

Over time, managing all these household expenses on a lower income could affect your progress towards your long-term goals.

So, working out how to cover your costs on a single income may require careful planning.

Equally, if your income changes but doesn’t fall – for example, if you inherit your late partner’s estate (more on this later) – you may benefit from speaking to a financial planner who can help you adapt to your new financial situation.

You may need to manage all your household finances for the first time

If your late partner took care of some or all of the bills, you may be faced with managing all the household finances for the first time. This could present both practical and emotional challenges.

You might not know where your late spouse stored important documents, and you may not have access to their account information. This could add further stress at an already difficult time.

However, it’s important to take control of your essential household bills as soon as possible. Otherwise, urgent costs may pile up and place pressure on your finances in the future.

Bills from a joint account will usually be paid as normal, but any paid from your partner’s account may not. So, you may need to transfer bills into your name and change the payment details to ensure that you keep on top of regular payments.

You could also gain valuable peace of mind from reviewing and updating any protection you hold.

If you and your partner held joint insurance, you’ll need to contact your provider and let them know of your partner’s death. You may be able to amend the existing cover, or your provider might require that you take out a new policy. You might also want to consider taking out additional cover to ensure that you and any dependents you have are protected financially.

For example, life insurance could ensure that your children are financially supported if anything happens to you, and income protection might allow you to manage essential costs if you become injured or too ill to work.

You might receive a sudden financial windfall

It’s likely that you’ll inherit some or all of your partner’s estate when they die – either according to the wishes expressed in their will or through the rules of intestacy if they didn’t make a will.

Your inheritance may include cash savings, investments, property and personal belongings, which could amount to a significant windfall.

Additionally, if your partner had life insurance in place, you could make a claim. In the likely instance that you receive a payout after claiming, you might receive a lump sum or regular payments, depending on the type of cover your partner had.

Deciding how to make the most of this wealth might feel daunting, especially when you have just lost your loved one.

So, it’s important to take a breath and not rush any decisions.

I can support you in creating a plan for using your windfall to help you progress towards your long-term goals and honour your spouse’s wishes.

You may benefit from reviewing your retirement plan

If your retirement saving strategy is based on a dual income, you may need to revisit your plans.

Unfortunately, single people usually need to save more for their retirement than couples. Indeed, FTAdviser (16 August 2023) has revealed that single savers need an extra £160,000 in retirement than couples.

So, when your partner passes away, you may need to make certain changes to keep your long-term financial plan on track.

I can help you to review your retirement plan in light of your new circumstances. We can work together to help you bolster your retirement savings, for example by increasing your pension contributions or investing some of your inheritance or life insurance payout.

To learn more, just get in touch.

Email lottie@truefinancialdesign.co.uk or call 07824 554288.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate estate planning or will writing.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. 

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance. 

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.  

Workplace pensions are regulated by The Pension Regulator.