Safeguarding Your Future: How to Prepare Financially for the Death of a Spouse

Admin • March 28, 2024

“In this world, nothing is certain except death and taxes.”

You’ve likely heard this famous quote from Benjamin Franklin, written in a letter to a friend as he neared the end of his life. Death is indeed a certainty for each of us, and this knowledge can make it easier to prepare for the end of life, including having a financial plan in place to protect and preserve your wealth for your loved ones.

While you may have contemplated getting your affairs in order before your own passing, what about those of your spouse? If you’re the surviving partner, the financial burdens placed on you can be significant. 

With the passing of a loved one, it can feel impossible to make important decisions, especially those concerning money. It’s important to understand the costs that you may shoulder with the loss of your spouse, as well as how to prepare financially, so you’re not left to deal with it during a time of grief.

Completing a financial planning checklist for death is likely not the most lighthearted task you’ll complete, but it’s something you’ll be thankful you sorted out ahead of time. 

Understand The Costs of Your Spouse’s Passing 

When your spouse passes away, there will be the expected final arrangements that need to be made, which can include a funeral and burial. 

According to the National Funeral Directors Association, the median price for a traditional funeral and burial in 2023 was $9,995 . However, this is only an average cost and may not include additional expenses such as a burial plot or transportation of the body, if your spouse wishes to be buried in a different state than where you reside. 

You and your spouse should know each other’s wishes concerning final arrangements. Consider exploring all the options that are currently available together: You or your spouse may want to consider alternative arrangements, such as a green funeral, cremation, or a celebration of life instead of a traditional funeral. 

Know the Process of Settling an Estate

Settling your spouse’s estate can take money and time; estate planning is essential to ensure this process goes smoothly and that your spouse’s legacy is protected.

All property that is jointly held with rights of survivorship should immediately pass to the surviving spouse without probate. Any assets that are held in a trust or have a payable-on-death beneficiary should also circumvent the need for probate. However, there may be other assets that necessitate probate and its associated costs, legal fees, and/or executor fees. 

After your spouse passes, the estate must settle their outstanding debts and obligations. These debts are typically paid out of the money or property left in the estate. As the surviving spouse, you’re usually not responsible for these debts unless you share legal liability for them, such as if it was a joint account or you were a co-signer.

Be Prepared with an Estate Plan 

Having an estate plan in place for you and your spouse long before you need it will spare each of you from the burden of arranging financial affairs after death. As part of a comprehensive estate plan, there are several legal documents to prepare:

  • Will
  • Trusts
  • Power of attorney
  • Medical directives
  • Life insurance policies (each spouse should know coverage, benefits, and issuer information)
  • Usernames and passwords to all financial accounts
  • Pension information (including survivorship benefits and related information)

Look over these documents regularly to ensure they contain up-to-date information. Keep them in a secure place in your home — not in a lock box or safety deposit box, as your loved ones may not have immediate access when they’re making final arrangements. Make sure your spouse, as well as at least one other trusted individual, knows the location of your documents. 

Review Long-Term Care Options

It’s important to also consider your options if your spouse needs extended medical care before their passing. The cost of care can quickly add up, and preparing for this uncertainty can help insulate your finances from major medical expenses.

Long-term care insurance policies can help protect your wealth from the impact of prolonged medical care. You’ll need to decide whether hiring a skilled in-home nurse or getting help from family members will be a better option for care. It can be a difficult discussion, but it’s important to review with your spouse how to plan for extended healthcare costs well before you’re faced with them. 

Assess Insurance Needs

If you obtain health insurance through your spouse’s employer, things can get complicated — and potentially costly — if they pass away. 

While your spouse’s death will trigger your eligibility for COBRA, these premiums can be expensive, and eligibility only extends for 36 months. When investigating new options, weigh your personal health needs with cost-saving options such as a high-deductible plan with an HSA. 

In addition to your health insurance, you may want to re-evaluate your life insurance arrangements with your spouse’s passing. If your children are already grown and no longer dependent on your support, you may not need as much life insurance. You may also need to take out your own policy if you held a life insurance policy with your spouse’s employer.

Recognize Other Potential Expenses

Beyond the direct costs associated with your loved one’s passing, there can be additional, less evident expenses that you may potentially face: 

  • You may want or need to take an extended leave of absence to grieve your spouse or give yourself time to be with family. This could impact your income and retirement savings if you’re still working.
  • You may want to see a therapist or grief counselor to help you process the death of your spouse. This can be an extended expense if not fully covered by insurance.
  • If your spouse was the one who managed the housework, yard work, or finances, it may be necessary to outsource these services to professionals if you don’t have the bandwidth to deal with them yourself.
  • If you decide to downsize and sell your home or move in with a family member, you may need to pay a real estate agent to sell your property, as well as other fees associated with the sale and moving expenses. 

You likely won’t anticipate all the indirect costs of a spouse’s death, but acknowledging that there can be additional expenses will help you be better prepared.

Consider Help in Your Estate and Financial Planning for Death

Preparing and financial planning for the death of a spouse can make all the difference when that difficult time comes. Because death evokes such strong emotions, even when it’s a long way off, it may be helpful to involve a financial professional to guide your preparations. 

A professional can work with you every step of the way in your estate planning and make the process less daunting. The knowledge and expertise of a financial advisor can help you navigate the complexities of estate planning, and ensure you have a financial plan in place that takes into account the present and future needs of you and your spouse.

At Five Pine Wealth Management , we have the experience to guide you through the process of estate planning and protecting the legacy you built with your spouse. As fee-only fiduciary financial advisors , we work only in your best interest to help you make the right financial decisions for yourself and your family. 

To see if we can help, call us at 877-333-1015, email us, or fill out our contact form to schedule a time to chat.

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The 457 Mistake That Could Cost Early Retirees Thousands

April 1, 2026
Key Takeaways Taking early withdrawals from your 457 while letting your IRA grow can help you build a more balanced retirement plan. First responders with LEOFF or PERSI pensions can use their 457 plan as a bridge between retirement and traditional retirement account access. Rolling your 457 into an IRA at retirement removes penalty-free access to funds before age 59½. Many first responders in Washington and Idaho can realistically retire early. Thanks to pensions like WA LEOFF Plan 2 or ID PERSI, disciplined savings, and a long career of service, retiring at 55 is common. If you've been putting money into a 457 deferred compensation plan, you may be sitting on a sizable balance by the time you retire. As retirement approaches, you may be wondering: “What do I do with my 457 deferred compensation plan?” Many people unintentionally make a costly mistake. They roll their entire 457 balance into an IRA the moment they retire, thinking it's the right move. It might seem logical to combine accounts and keep things simple by moving everything into one IRA. However, this move eliminates a key advantage of a 457 plan: you lose penalty-free access to your money before age 59½. Let’s look at how this works and how you can set up your retirement accounts to stay flexible in your early retirement years. Early Retirement at 55: The Income Gap Problem Whether you're covered by LEOFF Plan 2 or PERSI, retiring around age 55 is entirely realistic. LEOFF Plan 2 members can retire with a full benefit at age 53 (or as early as 50 with 20 years of service and a reduced benefit). Idaho PERSI first responders can retire as early as 50 under the Rule of 80. The years between ages 55 and 59½ are a unique financial period. Your pension might cover a portion of your income needs, but often not everything. Social Security usually starts much later, and if most of your retirement savings are in IRAs, taking out money early can trigger penalties. This is where your 457 plan can be especially helpful. Unlike most retirement accounts, 457 plans let you take out money without the 10% early withdrawal penalty once you separate from service. This rule gives you a helpful bridge between retiring and the time when traditional retirement accounts become easier to access. You lose this benefit if you move your money into an IRA too soon. If your pension doesn't cover all your needs and you rolled everything into an IRA, you might face penalties or be unable to access your money. This early-retirement gap is exactly what good 457 planning can help you avoid. 457 Plan Withdrawal Rules Once you separate from service, whether you quit, get laid off, or retire, you can start taking 457 withdrawals from your 457 plan without a 10% penalty, no matter your age. Whether you're 55, 45, or even 35, the penalty doesn't apply. If you move money from your 401(k) or another account into your 457 and then withdraw it, that money loses the 457's penalty-free status. It’s now treated like IRA money and is subject to the 10% early withdrawal penalty. Only the original 457 money stays penalty-free. You will still owe ordinary income taxes on every withdrawal from a traditional 457, just like an IRA. The key difference is that you don’t have to pay the extra 10% penalty, which can save you thousands of dollars. Should I Roll My 457 Into an IRA? Now that you know the withdrawal rules, you might be asking yourself, “Should I roll my 457 into an IRA?” This is an important question, and the answer is: it depends. Usually, moving everything at once isn’t the best idea. Many people roll their entire 457 into an IRA at retirement because it’s often suggested as a way to “consolidate” and “simplify.” While there are legitimate reasons to roll some money into an IRA, doing it all at once at age 55 means you lose your penalty-free income bridge. A few of the advantages of rolling some money into an IRA are: More investment options Estate planning flexibility Roth conversion strategies A better strategy for most first responders retiring around 55 is to split your 457 balance into two parts, or “buckets,” each with its own role in your retirement plan: Bucket 1: Use your 457 account for early-retirement cash flow. This is the money you'll live on from age 55 to 59½ (or whenever your pension plus other income is sufficient). The 457 allows penalty-free withdrawals at any time, so you control both the amount and timing of distributions. This bucket bridges the gap until your other income starts coming in. Bucket 2: Roll into an IRA for long-term growth. Once you've determined how much you need for the early years, the rest can be rolled into a traditional IRA. The IRA bucket offers more investment choices and greater flexibility for estate planning or Roth conversion. Here’s an example: Jason is a firefighter retiring at 55 from Washington with $300,000 in his 457. His LEOFF Plan 2 pension covers most of his expenses but leaves a $1,500 per month gap. Instead of rolling everything to an IRA, he keeps $90,000 in the 457, which covers about five years of that gap at $1,500/month, and rolls the remaining $210,000 into a traditional IRA. The $90,000 stays accessible, penalty-free, and the $210,000 continues to grow. By the time he turns 59½, the IRA restrictions are gone, and he hasn't paid any unnecessary penalties. Deferred Compensation Rollover: What You Need to Know If you decide to roll part of your 457 into an IRA, the process is simple. You can move your 457 into another retirement account, like a traditional IRA, Roth IRA, 401(k), 403(b), or another 457 plan. There are a few things to keep in mind: Direct rollover is the best option. Have your 457 plan send the money straight to your IRA provider. If you get the check yourself, you have 60 days to put it into your IRA, and your employer will withhold 20% for taxes. If you miss the 60-day deadline, it will be treated as a taxable withdrawal. Roth conversions are possible, but watch the tax hit. You can convert your 457 to a Roth IRA, but be careful about taxes. If you do this soon after retiring, your income might be lower, which could make it a good time for a Roth conversion. Just make sure not to convert everything at once without checking the tax impact. Putting IRA money back into your 457 is usually not a good idea. Once IRA or other retirement plan money goes into your 457, it loses the penalty-free withdrawal benefit. Only do this if you have a very specific reason. Washington's DCP and Idaho's PERSI Choice 401(k) have their own rules. Washington state's Deferred Compensation Program (DCP) is administered by the Department of Retirement Systems (DRS). Idaho first responders may have the PERSI Choice 401(k) as well as other 457 plans. Be sure you know which accounts you're dealing with before starting any rollovers. Here are two helpful resources: Washington DRS (DCP information) Idaho PERSI A Note on Taxes and Required Minimum Distributions Even if you don’t pay a penalty, you still need to think about taxes. Every dollar you take from a traditional 457 counts as regular income for that year. If you're not careful with how much you withdraw, you could end up in a higher tax bracket, especially if your pension income is already high. This is one reason the bucket approach is helpful: you can control how much you withdraw from your 457 each year and keep your taxable income in a comfortable range. It’s also important to know that required minimum distributions from traditional 457 accounts begin at age 73 or 75, depending on when you were born. Beginning in 2024, Roth 457(b) accounts in governmental plans became exempt from RMDs under the SECURE 2.0 Act. This is another reason to think about whether Roth contributions or conversions are right for you. Talk With Us Before Rolling Your 457 The 457 plan is a powerful tool, and rolling it into an IRA without careful thought means losing the feature that makes it so valuable for retirees. At Five Pine Wealth Management, we help many first responders and public employees in Washington and Idaho. We know the ins and outs of WA LEOFF Plan 2, Idaho PERSI, deferred compensation plans, and the unique challenges of retiring earlier than most people. If you're within 10 years of retirement, or if you're already retired and want to make sure your money is set up the right way, we'd be happy to help. Call us at 877.333.1015 or email info@fivepinewealth.com. Before making a decision about your 457 rollover, let’s make sure your retirement accounts are working together as they should be. Frequently Asked Questions (FAQs) Q: Does a 457 rollover to an IRA count as a taxable event? A: A direct rollover from a traditional 457 to a traditional IRA is not taxable. Q: Can I take money out of my 457 while I'm still working? A: Generally, no. 457 plans don't allow withdrawals while you're still employed, except for very limited exceptions (such as an unforeseeable emergency). The penalty-free access kicks in once you separate from service. Q: What happens to my 457 if I roll it into an IRA and then need money before age 59½?  A: You lose the 457's penalty-free protection. If you roll 457 funds into a traditional IRA, you lose the flexibility of penalty-free early withdrawals and become subject to a 10% early withdrawal penalty

“Which Account Do I Pull From First?” A Guide to Smarter Retirement Withdrawals

March 26, 2026
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