Tag: Widow’s Penalty

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Understanding The Widow’s Penalty and What You Can Do About It (Ep. 66)

Understanding The Widow’s Penalty and What You Can Do About It (Ep. 66)

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Losing a spouse is heartbreaking, but it can also trigger financial challenges that many women aren’t prepared for. 

The Widow’s Penalty is real, and it can have long-term consequences on income, taxes, and retirement.

In this episode, I walk through the Widow’s Penalty, what it is, why it disproportionately affects women, and what proactive steps can be taken to protect your financial future. We share real client stories, clear up tax myths, and offer strategies to navigate the road ahead with more confidence and clarity.

Key points:

  • How the Widow’s Penalty results in higher taxes and lower income due to filing status changes and reduced Social Security benefits
  • Why women are more impacted due to longer life expectancy, smaller Social Security/pension benefits, and caregiving interruptions
  • Real-life client examples, including challenging planning scenarios involving early widowhood and limited access to retirement assets
  • Important tax strategies, like using Roth conversions and capital gains harvesting during joint filing years
  • When couples should begin retirement planning conversations, emphasizing proactive communication before unexpected life events
  • And more!

Resources:

Connect with Eric Blake: 

Roth IRA earnings grow tax-free, and qualified withdrawals are also tax-free, provided certain conditions are met (e.g., the account has been open for at least 5 years and you are age 59½ or older, or meet another qualifying condition). Eligibility to contribute to a Roth IRA phases out at higher income levels. For 2025, contributions begin to phase out at a modified adjusted gross income (MAGI) of approximately $146,000 for single filers and $230,000 for married couples filing jointly. Non-qualified withdrawals of earnings may be subject to income taxes and a 10% early withdrawal penalty. Converting a traditional IRA or other tax-deferred account to a Roth IRA is a taxable event and may increase your current-year tax liability. Roth conversions cannot be undone

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Q&A: Social Security Secrets, Widow’s Penalty Warnings, and Working in Retirement (Ep. 49)

Q&A: Social Security Secrets, Widow’s Penalty Warnings, and Working in Retirement (Ep. 49)

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What should you know before claiming Social Security benefits?

Do you know the ins and outs of applying for benefits or how working affects your payments? Are you confused about common-law marriage eligibility?

In this episode, I answer listener questions about Social Security benefits, from clarifying the differences between spousal and survivor benefits to explaining the impact of working while receiving benefits and the new identity verification requirements. I also address specific scenarios, including those involving teacher pensions and common-law marriages, to provide clear guidance and help listeners make informed decisions about their retirement.

Tune in as we discuss: 

  • Social Security identity verification changes and how to navigate them
  • Survivor and spousal benefits—understanding your options
  • How taxes impact surviving spouses and the widow’s penalty
  • Insights into working in retirement and making informed choices
  • And more!

Resources:

Connect with Eric Blake: 

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