[00:00:00] Speaker A: Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.
[00:00:22] Speaker B: Welcome to Take Pride in Retirement, the podcast dedicated to helping members of the LGBTQ community protect and grow their hard earned money. Get set for a show full of education and insights with your host and advisor, Matt McClure. We recognize every family is unique.
[00:00:39] Speaker C: The goal of the show is to
[00:00:40] Speaker B: help you achieve financial freedom so you and your loved ones can have the
[00:00:44] Speaker C: retirement you've always dreamed of.
[00:00:46] Speaker B: A retirement you can take pride in,
[00:00:48] Speaker D: no matter who you are, where you're
[00:00:50] Speaker B: from or who you love.
So now let's start the Show. Here's Matt McClure.
[00:00:57] Speaker D: Well, hello there and welcome to another edition of Take Pride in retirement. Matt McClure here with you, your host, your, your friend, your pal, and your confidant. Thanks so much for being a part of things, as always.
[00:01:08] Speaker C: And I'm Josh Red Noble, the attache to the advisor, AKA co host, AKA hubby. Co host.
[00:01:14] Speaker D: Co host, Hubby.
Thank you so much. As I said, for being a part of the show. I'm really enjoying having you on here as well and I'm really enjoying having the listeners, slash viewers with us. If you are on the old YouTube machine, give us a like and a subscribe. I'd appreciate that. I know Josh would too, because, you know, it what helps me helps him essentially subscribe.
Still working on the tune. Yeah, we'll workshop it a little bit. It'll be good.
But yeah, give us a follow there and like, subscribe to the channel. Follow us on all the socials. We got your blue sky, we got your face place, AKA Facebook. We got threads, we got Instagram. We're like all over the place, even on LinkedIn. If you want to follow me, Matt McClure, RSSA C A S at LinkedIn. You'll see my little smiling face there and you'll know who I am and all. So, yeah, please do follow us all the places. Really would appreciate it today here on the show.
It's going to be a bit of a heavy topic, but it's going to be one that's super, super important. And we know as a married couple how important this discussion is. And as children of older parents, we know how important this topic is. We're tackling it this week both in this episode and the next one, that a lot of People just avoid, but they really need to understand and that's what happens financially when you lose a spouse. And so for LGBTQ community, this is a really important conversation because we face unique challenges that maybe the more quote, unquote, traditional people don't take into account and maybe the traditional financial planning might. Might overlook. Right, right.
[00:02:53] Speaker C: It's a difficult topic. And I just want to say, before we dive into this, I just want to give a shout out to all of our LGBTQ+ listeners and allies. And I just want to say if you want to schedule a 100% complimentary meeting with Matt, there's no obligation. I keep saying he's the advisor that cares if this is a difficult for so many of us, especially in the community. So whether it's about your own financial situation or your family or your business, he's here to help and he truly understands the unique challenges that face our community. It's true.
[00:03:25] Speaker D: It's true. And you can go to the website takeprideinretirement.com if you're watching on YouTube, by the way, you'll see it scroll across the bottom of your screen there throughout the episode. So do that. Also, you can go to, again, takeprideinretirement.com, schedule that free. It's a complimentary consultation. No cost, no oblig, all that stuff. Also, call me if you'd rather 855-246921, 1-8552-469211. And you can also listen to previous episodes of the
[email protected] by the way. And yeah, widowhood is something, I guess widowhood and widowerhood, if that's a thing. But losing a spouse, it's an emotional thing and it brings a lot of stress along with the financial thing. Even without financial surprises, there's enough stress to go in that situation. And so, yeah, reach out. I encourage you to do that. But also, we're going to cover a lot of this on the show here today.
And, yeah, I guess let's jump right in, shall we?
[00:04:27] Speaker C: Yeah, that's like when we're talking about losing a spouse, most people immediately think about the emotional impact, the grief, the loss, the adjustment. But there's a financial side to this that I think catches a lot of people off guard. And what I would ask you, Matt, can you break down what we're really talking about here?
[00:04:45] Speaker D: Yeah, I mean, you hit the N on the head when you say most people probably do think about that emotional thing. I mean, that Emotional loss I can't even imagine can be very overwhelming. We have both witnessed that happen, like with our parents, because both of our dads passed away and our moms were still around, and my mom still, thankfully, is, unfortunately, Josh's has also passed away.
But it is a difficult thing. I know emotionally, both of our moms went through it and we saw it firsthand while we were also grieving ourselves. And so it's a difficult thing. Thing. A lot of retirees, though, the financial shock can be just as life altering. And, you know, women are especially vulnerable because of their longer life expectancy. Again, both of our moms living longer than our dads and often lower lifetime earnings. Like, you know, my mom didn't earn as much as my dad over her lifetime, over her working lifetime, because, you know, she was doing a lot of staying at home and taking care of myself and my sister and my grandmother and all that while my dad went out to work.
So that is a huge thing. And really, you know, when we bring it home to LGBTQ couples, it's a really important conversation because we have fought so hard for so long for marriage equality and for survivor benefits. And so we gotta make sure that you are protecting those rights. We are all collectively protecting those rights and also using those rights to our advantage, because we have them. Use them right.
And, you know, a lot of us also face additional challenges. Like, luckily enough for Josh and myself, we have had great family support. We've had a lot of friends and acquaintances and all of that who have not necessarily had the family support that we have been lucky enough to have. And we both realize how blessed we are because of that.
But people have dealt with discrimination. I've dealt with workplace discrimination before. We were just having a conversation about that earlier today.
And even in financial and healthcare settings, I've told the story your kidney stone before.
And so it can be a difficult thing to navigate. But obviously, LGBTQ folks have a unique set of challenges, as per usual.
[00:07:02] Speaker C: Yeah. And earlier you said you talked about the financial shock of this, which is life altering. So what does that actually look like if we're talking about real numbers?
[00:07:11] Speaker D: Oh, yeah. So we've looked up some studies on this, and according to the federal government numbers, actually more than 1.2 million Americans age 60 and older lose a spouse every year. And so 1.2 million. It's not uncommon. See? And newly widowed individuals experience an average income drop of about 11% even after they adjust for household size.
About 16% of newly widowed older adults fall below the poverty line compared to 10% of their non widowed peers. Because you got that loss of income right, Even in a, a situation where maybe you're both taking Social Security.
Well, one of those Social Security payments is going to go away. We'll talk more about that in just a bit. And the kicker, though, is that about 41% say they had no prior financial planning discussions with their spouse. They're just caught completely off guard. I've been in this business a few years now, and by business, I mean financial advice and working with clients and all of that. Luckily, none of my clients have passed away or experienced their spouses pass away. But. But the overwhelming thing that keeps coming up when I talk to other financial advisors about it is that they see it all the time with older folks who maybe they've been working with for years, but only one spouse has been the one who's been involved. And so it catches the other spouse off guard. They don't know what they have when it comes right down to it in the end. And so about 41%, so more than 4 out of 10 people say that they have had no prior financial planning discussions with their spouse. It's kind of crazy.
[00:08:50] Speaker C: Well, that's scary. So no planning at all. That seems like something that couples should be talking about. I know it's not comfortable to talk about, especially you don't want to think about losing your spouse at all. But there needs to be a plan, right?
[00:09:02] Speaker D: Yeah, there's got to be a plan.
I used to work with a guy who would say he was in the military and he would say proper prior planning prevents pitifully poor performance.
The five P's.
But really, when they say it out in the military, there was another word instead of pitifully, but you get the idea. So, yeah, a plan is like essential. So it's one of those uncomfortable conversations, as you said, that a lot of people just tend to avoid. But it's an important one. And so for LGBTQ plus couples, there's sometimes that kind of extra layer. Right. Of reluctance. Because, you know, if you don't think about it, we've only sort of recently gained these rights. And especially when you're looking at older LGBTQ plus couples, you know, the people as like, relative to their overall lifespan, you haven't had these rights for all that long. And so talking about death feels like maybe you were not celebrating enough about having the rights. But it can be part of that. That celebration actually is because it's an act of love. It's you making sure that the other person is Going to be taken care of. Right. And so avoiding the conversation doesn't make it go away. It's one of those tough lessons that I have had to learn in my life.
It's like when I was in elementary school, avoiding homework didn't make it go away.
It just meant that you had more work to do later on. So, yeah, I mean, you've got all these things, like combination of income loss, potential tax changes, any ongoing expenses.
Experts really kind of look at that as a financial double hit for widows and widowers.
[00:10:35] Speaker C: Okay, so what do you mean by a double hit?
[00:10:37] Speaker D: Well, I mean, so. So it's not only at the same time the income is going down, Expenses a lot of times stay the same or they even increase. So you'd be surprised at like, okay, the electricity bill. You'll think, oh, well, you know, one person's not here anymore using. So my power bill is going down by like 50%. No, it does not happen that way. You still keep the AC going. You still, you know, use the same appliances and all that. Maybe you don't wash as many loads of clothes or something, but it's not gonna just fall off a cliff.
And so you've got to account for that. Like housing costs, your healthcare needs, debt obligations, they can become harder to manage on that single income that you're left with. And a lot of widows and widowers have to navigate critical financial decisions like when to claim Social Security, which is a huge one. It's one I talk about with folks all the time, or whether to downsize. Like, you know, during a period of that grief and stress, you're worrying about your finances, you're worrying about where you're living. Is this house too big for just me? Is it too much to manage now that I'm getting older? All those things keep coming up, but you've got to go through that period of mourning as well. And so you want to take care of as many of those things as possible from the jump in the beginning, ahead of time, so that you don't have to worry about and stress over it all when you're already stressed out enough. Right.
[00:11:57] Speaker C: So it's like if you wait too long, you're having to make all these major financial decisions at literally the worst possible time in your life emotionally.
[00:12:05] Speaker D: Yeah, like, nobody makes good decisions at a time when they are just in utter grief and mourning. Right.
And having it taken care of, having a plan in place beforehand is so important for that very reason.
There's also this lack of financial literacy. We talked about that a Little bit, I think, last time, you know, and financial sort of involvement prior to a spouse's death, that can lead to benefits that you miss out on because you didn't know they were there.
Higher debt, costly mistakes for LGBTQ couples, again, it is critical to have just ironclad estate documents because of those potentially unsupportive family members that I mentioned earlier. You might be in that situation.
And we've seen that actually with a friend of ours who passed not all that long ago. And it wasn't necessarily that family wasn't supportive of him, but there were, like, some estranged family members for other reasons. And it's. Here they come crawling in at the last minute after somebody is gone, saying, like, ooh, how can I get my hands on what they had? I'm legally entitled to it. Well, if you've got an estate plan that names other people people and places things in trust and makes it go to this person instead of that person, you've got ironclad documentation of the things that you have and over your wishes. And so you got to be proactive in planning. You got to understand survivor benefits, you've got to maintain updated estate documents, coordinate your claiming strategies as far as, like, Social Security and that sort of thing, and all of that can reduce your financial hardship at a time when, you know, you don't. You don't need it anytime, but especially in the aftermath of the loss of a spouse.
[00:13:52] Speaker C: Right. And so, Matt, if you want to say, what's the takeaway here for our listeners about this?
[00:13:56] Speaker D: Well, I mean, preparing for the financial realities of becoming a widow or a widower is not something that's pessimistic. It's not something that should. Should drag you down and make you feel bad. And all this stuff. That's not why we say the things that we say, and that's not why we're giving the information we're giving.
It's actually. It's not to scare you or make you feel bad. It's essential because you want to protect your spouse, you want to protect your loved ones. You want to protect your independence and your financial security in retirement, and you want to take that worry off of the table. And so, you know, we don't. We don't talk about this stuff to be morbid. We talk about it because it's so important. Right? It's about being smart, protecting the people that you love, and it's also about protecting the rights that we fought so hard for as LGBTQ folks. So go to our website. It is take pride in retirement.com/prideinretirement.com youm can set up a free consultation there. When I say free, it is absolutely free of any cost or any obligation. You can also give me a call. 8552-4692-1185-5246-9211.
[00:15:04] Speaker C: Do it, guys. I keep saying that just because it's.
It's important to start planning and you want someone in your corner, like Matt that understands us, understands our community, and has your best interest at heart, because there's a lot of people that do not.
[00:15:20] Speaker D: Yeah.
[00:15:21] Speaker C: So that's what I would say about that. And I'm not just saying that because he's my husband. So I would say now we've established that there's a financial impact. Right. So let's get into the specifics about that. So what are the main income sources that change when someone loses a spouse? What happens?
[00:15:36] Speaker D: Yeah, a lot.
So the emotions. Yeah, are one thing, but then there's also the financial side. And so that's where it kind of gets kind of technical. But it's crucial to understand losing a spouse often creates really this immediate financial shift, but a lasting one as well. Because Social Security is going to be probably more than, well, not more than cut, maybe a little bit less than cut in half. But one of those checks is going to go away. The higher amount of the two is going to go away. Possibly part of a pension will just kind of disappear overnight. I think that's one of the biggest things that people don't necessarily think about ahead of time.
[00:16:16] Speaker C: Well, that's what I'll say. So both Social Security checks don't continue?
[00:16:19] Speaker D: No, not at all. So wouldn't it be nice if they did? But they don't. This is one of those things that I sort of, you know, learned about in the thick of things when my dad passed away a few years ago. And it was that, you know, my mom gets contacted by the Social Security Administration.
They say, here's your new benefit amount. And it was my dad's benefit amount that she was going to then be receiving, and her benefit amount, the old one, went away.
So that's essentially what happens is he was the higher earner. Right. And so he had the higher Social Security benefit. So the lower of those two checks went away, she got to keep the higher one. So that is by law, it's reduced when one spouse dies.
The average survivor benefit for widows is roughly about 1500 to 1800 bucks a month.
And that's according to the Social Security Administration. But it may be significantly lower than the couple's prior combined income. Right. So if your spouse, like maybe if you and your spouse earned close to the same thing, you weren't necessarily eligible for a spousal benefit while they were alive or anything like that. You had maybe close benefit numbers, then you're going to get, you know, a close to 50% reduction in that case in your Social Security benefit. It's, it can cost you a lot.
[00:17:32] Speaker C: So you could be losing potentially thousands of dollars per month just from Social Security alone.
[00:17:37] Speaker D: Yep. And then, and then you've got to take into account any other income sources. Right. I mean, the financial impact of widowhood is so huge and it's often underestimated when you're doing your retirement planning. Even though, you know, the death of a spouse can, as I said, cut household income by at least a third, maybe up to 50% like that.
[00:17:56] Speaker C: And what about pensions to those that still continues or no?
[00:18:00] Speaker D: Yeah, I mean, it depends. It depends on the actual structure of the pension itself. It depends on exactly how it was set up. They're becoming fewer and farther between these days, been that way for a while, but really these days they're fewer and farther between.
And so pension income may continue for a widow. Oftentimes though, it's at a reduced level, maybe at 50% if it's like a joint and survivor pension structure kind of a thing.
Now, I'm not saying obviously that's going to be true for everybody because as I mentioned, there are different structures to different pensions.
Some pensions may stop entirely depending on how it was originally set up. And so maybe if it's an older single life type pension or annuity, then that spouse passes away and that money is gone as well.
[00:18:45] Speaker C: So basically, decisions that you made years ago about how to structure this pension could have huge consequences later.
[00:18:51] Speaker D: Yeah, and that's the thing is you've got to have in mind when you're making any decisions about pensions, you're making any decisions about annuities, about Social Security, you've got to have your mind set on the fact that you're playing the long game.
This is not a short term thing that you're thinking about or planning for. This is your future, this is your retirement future. And this, this is the future after your spouse is gone or after you are gone and your future for your spouse. So, yeah, pension and retirement plan election choices that you make when you're much younger, much earlier on in your life can have lasting consequences.
And it's so important to work with a financial Advisor who understands the unique needs of LGBTQ individuals and couples.
Somebody who knows the history, somebody who lives it, somebody who respects our relationship, Somebody who gets you basically and can help navigate both the financial and the legal sort of landscape here. And I say legal in a general sense because I'm not an attorney or anything, but I can help make sure that you are put in the right direction. Maybe contact an estate planning attorney. We work with a service that can provide those. And you can get, get estate plans done at one of the lowest costs you're going to find. You can, of course, ask about that when you reach out, but some of us may have had pensions from before we could legally marry, for example, and that adds another layer of complexity. So it can be a difficult thing. That's why you want to work with somebody who does this all the time. Yeah.
[00:20:27] Speaker C: And now you mentioned everyone's favorite topic, taxes.
So how do taxes change when you lose a spouse?
[00:20:35] Speaker D: Everyone's, especially this time of year when people are filing their taxes, finding out
[00:20:38] Speaker C: where's my money going, how much you're
[00:20:40] Speaker D: getting back or not.
But yeah, taxes, it's another big hit. You know, tax filing status can shift from married to single in both cases, and that can actually increase your taxable income and reduce the deductions that are available to you. And much like I am not an attorney, I'm not a cpa, I'm not a tax attorney either, anything like that, that. But just general rule of thumb that is what can happen up to 85% of your Social Security benefits can be taxable. That doesn't mean you're going to pay 85% tax rate on your Social Security benefits, but it means you'll pay whatever tax rate you pay on up to 85% of that. Income thresholds, though, are lower for single filers than for married couples. And so that's, you know, it's not situation you want to be surprised by when it happens.
[00:21:33] Speaker C: Well, no, because it's confusing because you're making less money but potentially paying a higher percentage of taxes.
[00:21:39] Speaker D: Yep.
It's one of those weird things about the tax system and it's people, you know, we talked about the widow's tax or the widow's penalty before on the show. That's why it's called that, because your income drops, but your tax rate actually increases because of the filing status change. And so tax planning, future tax planning, I can obviously help with, we help people with Roth conversions and all that all the time to increase your tax free bucket of money.
Just had A meeting today actually with someone about that, trying to come up with an amount about, okay, how much can we afford to convert every year without throwing us into another tax bracket? All this stuff. And so it really does become critical to look at that.
For widows, widowers who have, who have lost their spouse and especially in LGBTQ
[00:22:27] Speaker C: plus community, is there anything people can do ahead of time to minimize this impact?
[00:22:32] Speaker D: Oh, yeah. You know, if you understand the survivor benefit sort of rules, couples can make smarter claiming decisions ahead of time. Right. It's something that I talk with folks about all the time. You were, you were there, you were my attache at our Social Security seminar we had not long ago.
[00:22:45] Speaker C: Indeed.
[00:22:46] Speaker D: And signing people in and all that stuff and showing them where the bathroom is, which is always a good thing.
[00:22:51] Speaker C: Look, someone has to do it.
[00:22:52] Speaker D: When you got to go, you got to go and you got to know where you bathroom down there.
[00:22:55] Speaker C: And they got to learn something and
[00:22:56] Speaker D: know where the bathroom is. I know. And you gave them bottles of water, which was the most important thing. So then they could later when they had to go to the bathroom, they knew where it was anyway. But that was one of the big questions, right, is what's the, what's a spousal benefit while you're alive potentially, and who's eligible for that? But then also what is the survivor benefit? How is that calculated, figured out and everything? And so like if the higher earning spouse, for example, delays Social Security, then that can reduce the widow's risk.
Whoever the person who is left behind is, if that is the lower earning spouse, obviously it can reduce the risk of financial hardship because you've maxed out your benefit. And so then spouse passes away and they see their monthly check go up, but then theirs, that was less goes away. So it's still a reduction in that income, but you sort of minimize that as much as possible if you just time it right.
[00:23:53] Speaker C: So there's a significant difference basically, just from the timing alone.
[00:23:57] Speaker D: Yeah, yeah. I mean, it's why it's important to plan ahead. You know, you've got to have an idea of what you want to do. You don't just want to make decisions kind of willy nilly gets get to get to 62 and say, well, I'm eligible for Social Security now and I'll just take it.
Maybe that's the right decision for you. Who knows? Chances are it's probably not because, you know, waiting at least until your full retirement age may be more advantageous unless you just are really in need of the money. Right then.
So get some help in making that plan and make a plan that is right for you, not for, you know, Joe down the street or Sherry who lives in the next town over. You are not Joe or Sherry. You are you.
[00:24:39] Speaker C: Sorry.
Never mind how much I could sing and get in trouble.
[00:24:42] Speaker D: So, yeah, now a couple of notes, probably fine.
But yeah, I mean, this is the kind of thing that we do with people every day and I really love doing that. Just helping people kind of see through the weeds and see through the fog, you know?
[00:24:56] Speaker C: Yeah. I mean, I think this has just been been especially for me. It's just really eye opening. And I think a lot of our listeners are going to realize they need to have some conversations with their spouse and their financial advisor, which I hope will be you, Matt.
[00:25:10] Speaker D: Well, me too.
But yeah, I mean, as we said, it's not easy to discuss these kind of topics, but it's important that we do. And so go to takeprideinretirement.com Once again, take prideinretirement.com. you can schedule the free consultation there. And when I say free, I mean free. There is no cost. There is no obligation at all later on. So in a couple of days, we're going to talk about in our next episode the most kind of common mistakes people make in the first year of widowhood and what couples can do now to protect each other in the future.
[00:25:43] Speaker C: I love that. Looking forward to it. And like Matt said, listen, if you're thinking about your own situation, I would say don't wait. Just reach out to schedule that free consultation and start making that plan so that you feel more secure about your future.
[00:25:55] Speaker D: Yeah, that's why I do what I do.
And I'm here to help you navigate all of those decisions that are not easy and they can be really complex and confusing. So, yeah, reach out. Absolutely. Take pride in retirement dot com.
All right, so that is going to do it for this edition of the show.
Mr. Josh, thank you.
[00:26:12] Speaker C: Thank you, Mr. Matt.
[00:26:14] Speaker D: Mr. I feel so formal.
[00:26:16] Speaker C: And like, I said subscribe.
[00:26:18] Speaker D: Yes, like, like and subscribe. And you get, you know, a free tune sung to you every time that, you know, every time he sings that an angel gets its wings and somebody subscribes to the show. So please do it. I'd appreciate that. We both would very, very much. Until next time, take pride in yourselves and take care of each other. We'll see you then.
[00:26:37] Speaker B: Thanks for listening to Take Pride in Retirement. Members of the LG LGBTQ community deserve to work with a fiduciary financial advisor who puts their needs first. To schedule a free no obligation consultation with Matt McClure and the team at Active Wealth Management, call 855-246-9211 or go online to take PrideInRetirement.com investment advisory services offered through Brookstone Capital Management, LLC, BCM a registered investment advisor, BCM and Active Wealth Management, Inc. Are independent of each other. Insurance products and services are not offered through BCM but are offered and sold through individually licensed and appointed agents. Matt McClure and active wealth Management are not affiliated with or endorsed by the
[00:27:20] Speaker C: Social Security Administration or any other government agency.
[00:27:23] Speaker A: Registered investment advisors and Investment Advisor representatives act as fiduciaries for all of our investment management clients. We have an obligation to act in the best interest of our clients and to make full disclosures of any conflicts of interest. Please refer to our firm brochure the ADV2A item 4 for additional information. Information provided is not intended as tax or legal advice and should not be relied on as such. You are encouraged to seek tax or legal advice from an independent professional.
