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The degree of financial challenges a young widow faces often revolves around whether the deceased spouse had life insurance and, if so, how much.

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While most people assume widows are older women who have lost their lifelong partners, there are a significant number of young widows in their 20s, 30s and 40s facing life transitions that require specialized financial planning and support.

According to Census Canada, the average age for widowhood in this country is just 56 years. That means many widows are still in the accumulation years of their lives and will need to prioritize financial concerns to help themselves – and possibly their children – stay afloat.

The biggest challenge for widows is managing lost income, says Rona Birenbaum, certified financial planner and founder of Toronto-based fee-only financial planning firm Caring for Clients. Most couples today are dual income and build a lifestyle around that.

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“When one of those incomes disappears, it can create a financial crisis,” she says. That could include an inability to pay a mortgage or other commitments – the loss requires a "complete revamp of one’s financial plan.”

Ms. Birenbaum is a previous participant and instructor at Camp Widow, an annual event that provides widowed persons with the tools and resources to rebuild their lives after the death of a spouse or partner. She says she was surprised by how many young women in the program were widowed because of car accidents, motorcycle crashes or suicide.

Although some spouses also passed away from long-term health conditions, many young widows lose their partners unexpectedly, which not only has emotional repercussions, but financial ones, too.

The degree of financial challenges often revolves around whether the deceased spouse had life insurance and, if so, how much.

“Although receiving a large life insurance benefit does not fix the problem of the loss of a spouse, it does smooth the rough edges of some of the most difficult financial challenges,” Ms. Birenbaum says. Widows who don’t receive a life insurance payout may have a harder time getting back on their feet.

Aside from putting long-term savings goals on hold, which is often necessary to focus on short-term priorities, widows are more likely to accumulate debt.

“Widows can [go into debt] if they put their head in the sand, which is a natural response, and don’t change how they live. It’s almost an inevitable outcome,” Ms. Birenbaum says. “The sooner they get some advice and a plan that reflects their current reality, the better.”

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Charlotte Paul, a financial advisor with Perspective Wealth Management at Toronto-based Raymond James Ltd., specializes in supporting divorced or widowed women and advises her clients to not make any major decisions in the first year of a spouse’s passing. Instead, she says that widows should “triage” their financial concerns.

“That first year should be spent on making sure your bills are all taken care of, insurance premiums are up to date, figuring out what your cash flow is as an individual versus as a couple, and what your net worth is,” she says.

Decisions such as moving houses or paying off a mortgage using an insurance payout should be put on the backburner.

“When you’re under that much stress, making critical decisions that cannot be revoked is not in anybody’s best interest,” Ms. Paul says.

“A lot of people have this knee-jerk reaction that once they get the insurance payout, they need to pay off every outstanding debt they have, especially their mortgage. Then, after they realized they’ve made this irrevocable decision they now have a cash-flow problem.”

Jennifer Black, private wealth manager, portfolio manager and family enterprise advisor with DFS Private Wealth in Mississauga, which operates under the Mandeville Private Client Inc. umbrella, also cautions widows against looking at insurance payouts as an investment asset, reiterating that cash flow should be their number one priority.

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For example, she tells the story of a widowed woman with two teenagers who first visited a bank-based advisor before coming to Ms. Black’s office. In response to the insurance payout, the advisor at the bank immediately asked what the widow’s risk tolerance was for investment purposes.

It’s key that widows and their advisors understand the whole picture before making any decisions.

“It’s not about investing a couple hundred thousand dollars,” Ms. Black says. “It’s understanding how to provide the cash flow they need of, say, $700 a month – plus investing [the assets] in a way that the cash flow can continue.”

Lastly, as difficult as the aftermath of a spouse’s death may be, advisors should help widows focus their energy on their strengths during this time.

“Widows are stronger than everyone thinks and stronger than they even know,” Ms. Birenbaum says. “One of the major financial strengths that widows are not given enough credit for is their income-earning ability.”

Young widows have time on their side and, therefore, potential for much more income growth. To manage stress, advisors should guide widows to identify the positive in their lives, such as their career track, focus on life-long learning, or even family members or social networks that can help with areas such as day care.

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“It’s important to highlight for those women what they have going for them, not just what they’ve lost,” she says.

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