Chris Heerlein here, host of Retire Ready TV on KXAN and Wealth Radio every Saturday on News Radio KLBJ for over a decade. Today, I’m diving into a topic I’m deeply passionate about: empowering women investors. It’s about getting engaged, being prepared, and taking control of your financial future – especially in the event you outlive your spouse.
Contents
Common Financial Dynamics in Relationships
Often in client meetings, we see a familiar pattern: one spouse is more engaged with investing and long-term strategy, while the other handles day-to-day budgeting or household finances. It works well – until something happens.
One reason families come to REAP Financial is to ensure they have a trusted partner if the spouse who manages investments passes away. And yes, we’ve seen a trend: women are less likely to be actively engaged in financial planning. Not always, but enough to take notice.
That’s why we encourage women investors to become more educated and proactive – so they’re never left scrambling during a difficult transition.
Social Security planning is one of the most critical areas to understand. If you outlive your spouse, will you receive widow’s benefits? Which check will you get – and what’s your strategy?
Key points to keep in mind:
- You can choose between your own benefit and your late spouse’s benefit – whichever is higher.
- If you took your own benefit early and later switch to a widow’s benefit, the payout may be reduced.
- Timing is crucial – delaying benefits can result in a larger survivor benefit.
These decisions can significantly impact your lifetime income, so thoughtful planning is essential.
When a spouse passes, the surviving partner moves from filing jointly to filing as a single taxpayer. This “widow’s penalty” often increases tax burdens and other costs.
Here’s why:
- You still need much of the same income to maintain your lifestyle.
- Required Minimum Distributions (RMDs) continue, but now they’re taxed at higher rates.
- Medicare premiums may rise, since they’re based on income – not net worth.
Without proactive planning, taxes can quickly become one of the largest retirement expenses.
Home Sale & Capital Gains Taxes
You may decide to sell your home after losing a spouse. But what about capital gains?
- As a married couple, you can exclude up to $500,000 in gains on your primary residence. As a single filer, that exclusion drops to $250,000.
- Good news: you receive a step-up in cost basis when your spouse passes, provided the home was jointly owned.
- That step-up means taxable gains are reset – minimizing or even eliminating capital gains taxes.
- The same applies to appreciated stock or brokerage account investments, allowing you to diversify holdings with reduced tax consequences.
What You Can Do Now
- Start engaging actively with your financial plan.
- Learn your Social Security options in detail.
- Prepare tax strategies for both now and widowhood.
- Talk with your adviser about asset titling and step-up in basis rules.
Get the Guide
Want our “10 Tips to Empower Women Investors”?
Email retire@reapfinancial.com with the subject line “YouTube Women’s Guide” and we’ll send it straight to your inbox.
You don’t have to do it alone – you just have to start.
Have Questions About Retirement Planning? Contact REAP Financial
Learn more about how we help our clients plan for a successful retirement.
Give us a call: (512) 249-7300
Send us an email: admin@reapfinancial.com
Our Main Office Address
REAP Financial
9414 Anderson Mill Rd #100
Austin, TX 78729
Chris Heerlein, a Texas native, is the CEO of REAP Financial and founder of REAP Private Client Group (RPCG), specializing in wealth creation, preservation, and growth for affluent individuals, business owners, and executives. RPCG provides financial and investment advice, advanced tax strategies, business succession planning, and excellent client service. Chris is a trusted financial advisor, author of Divorce With Dignity (2019) and Money Won’t Buy Happiness But Time to Find It (2017).
Chris also hosts Wealth Radio on NewsRadio KLBJ, Retire Ready TV on KXAN and YouTube and is a sought-after speaker. Based in Austin, Texas, he lives with his wife, Hannah, and their three children and actively supports charitable causes.
