Liz Weston: How to reduce your ‘widow’s penalty’
By LIZ WESTON of NerdWallet
After a spouse dies, the survivor’s financial situation often changes for the worse. Social Security benefits can drop. Tax rates go up (known as the “widow’s penalty”). Pension income may fall or disappear entirely. The longer the survivor lives, the worse their financial position may become. Some survivor penalties can’t be avoided, but good planning can reduce their impact. First, make yourself aware of how your financial situation would change if your spouse died before you. Then, consider tax-free sources of income and think about talking to a tax professional.
