Are you prepared for the death of your spouse?

Death is one subject that people are, understandably, reluctant to discuss. Thoughts of our own mortality are usually ignored as we do our best to think of more positive matters. Unfortunately, death cannot be avoided. While it may not be a pleasant topic, it is one that should be prepared for long before the event is expected to occur.

One item of planning that must be considered is the financial situation of the surviving spouse and what can be done to prepare for a potential shortfall.

Women survive their spouses more often then men. The Administration on Aging estimates that seven of 10 women will outlive their husbands. The average woman spends nearly 15 years away from the workforce while the average man will be away for 1.6 years. Because they generally spend more time away from the workforce, women are more likely to receive lower benefits from company pensions, 401(k) plans and Social Security.

Various estimates indicate expenses after the death of a husband will be 80% of what they had been when he was alive. Unfortunately, a widow's income may likely be much less than that. Of the elderly persons with income below the poverty level, over 70% are women. More than half of those were not at this level before their husbands died. In addition, elderly women have a higher risk of extended illness or disability. Because fewer women qualify for health benefits as a result of less time in the workforce, this can put an even greater burden on their retirement income.

A husband's pension benefits may be reduced by 50% after his death. Depending on the payment option chosen, benefits may end entirely. If you or your children are eligible, Social Security may provide some benefits. However, benefits may be reduced based on age. If you are named beneficiary of a 401(k), there may be options available and proceeds may be rolled into an IRA, if appropriate.

If your retirement income is a concern, you may wish to begin an investment or savings program that takes advantage of the financial products available at State Farm®. Whether it is a tax-qualified retirement plan, savings account or certificates of deposit, the sooner you start, the more time you have to work toward your goal. You may feel that you do not have the time or the money to begin, but there is no time like the present.

You may invest in financial products that have contribution options as low as $50 per month in conjunction with an Automatic Investment Plan. With the help of your registered State Farm® agent, you can set up an investment program that automatically withdraws a pre-set amount from an account of your choosing at regular intervals you can specify. Your registered agent can assist you in determining the investment opportunities available depending on your goals and tolerance for certain risks.

State Farm Agents do not provide tax, legal or investment advice.

State Farm VP Management Corp Risk/Important Disclosures. State Farm Mutual Funds Prospectus. The State Farm College Savings Plan Enrollment Handbook (PDF 276 KB).

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AP2008/01/9827