You’ve Saved Enough, but Will Your Surviving Spouse Continue to Spend?
Episode 32
You’ve Saved Enough, but Will Your Surviving Spouse Continue to Spend?
Published on April 22nd, 2026
Episode Summary
Episode 32 of Retirement Tax Matters explores a gap in financial planning that many high-net-worth retirees can overlook: the difference between leaving enough money for a spouse and ensuring they feel the freedom to use it. Garrett Crawford, CFP® explains that it took him quite a few years of practicing to realize that the spouse who is less involved in the family finances can often default to being over-conservative once they are on their own. The conversation addresses how a dominant financial organizer can become so focused on a target savings goal that they miss the reality that their spouse might spend much less than they could because spending more might seem frivolous. Garrett and Adam touch on a slightly polarizing issue by explaining how a deferred non-qualified income annuity could be an interesting tool to consider for high-net-worth retirees who want a plan to ensure their spouse continues to spend. The episode highlights the technical importance of planning for the transition from joint to single tax brackets and why using after-tax funds for this purpose can be a unique strategy if pre-tax RMDs will be large in the future. This discussion encourages high-net-worth couples to look past their investment statements to see if their plan actually addresses how a surviving spouse will relate to their wealth in the future.
Key Tax Planning Questions
Question 1: How to help my spouse spend money after I die?
One lesson I have learned as a financial planner is that life is unpredictable. While we spend decades focused on the math of saving, we rarely discuss the emotional transition of spending, especially for a surviving spouse who has spent years in a passive financial role. In many high-net-worth households between $2M-$8M, there can be a heavy reliance on portfolio withdrawals to meet household income needs. When the primary financial driver dies, the surviving spouse is often thrust into a management role they didn't ask for and might not feel comfortable with.
I have seen spouses struggle mightily with this transition. Consider a household with $75,000 in Social Security benefits that drops to $50,000 upon the first death. If they were supplementing that with $120,000 in portfolio withdrawals, the survivor might be tempted to lower that withdrawal. Not because they have to, but because seeing a fluctuating investment balance creates anxiety.
While a spouse should have autonomy in their decision-making, here are two ways to provide a foundation for their spending confidence:
Finding a CFP® professional with integrity and capacity is a way to insulate your family from uncertainty. Managing things can work great and save money during your working years, but as you age, having a financial planner who understands your family’s goals can take the weight off a survivor's shoulders. I also believe as we age things that used to be clear become a little hazy. Including the less involved spouse in these meetings now is a high-value planning move.
This week’s episode explores a sometimes polarizing topic of how a non-qualified income annuity can serve as an unexpected tool to help mitigate this issue. I’ve seen firsthand where many retirees will spend every cent of a pension or Social Security check because it is guaranteed, yet they hesitate to touch their investments due to flexibility and choice. Considering a small, deferred annuity might force a specific amount of income into your surviving spouse’s bank account each month, ensuring their basic needs are met.
Another option often discussed is using a trust to manage spending. While trusts are excellent for oversight in complex estates, they can sometimes add more hassle than a surviving spouse needs if the goal is simply the freedom to spend. The goal of this planning is to move from a place of guessing to a place of execution, protecting your spouse from the surviving spouse tax shock and the psychological challenge of managing a large portfolio alone.
Question 2: Why would a math-driven financial planner recommend an annuity?
My first job after graduating with my electrical engineering degree in 2013 was right here at Providence Wealth Management, LLC. When I entered the industry, I was a blank slate. I didn’t know the difference between term and whole life insurance, or index investing versus active management. Like a good engineer, I knew how to ask questions and research for answers. One of the biggest influencers of my early philosophy came from scouring the Boglehead forums influenced by Jack Bogle. The Bogleheads are famous for favoring index investing and being deeply skeptical of complex insurance products like equity-indexed annuities or whole life insurance.
However, even the Bogleheads agree that annuities have a place provided it is the right kind in the right situation. A major part of being a CFP® professional is checking my biases at the door to ensure I am helping my clients reach their specific goals. Sometimes a goal is mathematically expected, like building as much wealth as possible. Other times, the goals aren't as black and white. I work with humans who are complicated and often have competing desires, such as wanting to reach their financial goals without taking any market risk to get there.
As a math-oriented financial planner and a fiduciary, my job is to educate and help you understand the different ways to solve for income and risk of you or a spouse living for a very long time. Unless a client tells me to take the lead, planning is a collaborative process. I have worked with single clients with no beneficiaries where an income annuity was a great fit because it maximized their spending for an unknown life expectancy. On the other side, I have met new clients with half of their assets tied up in a terrible annuity they were sold at a dinner seminar and we work through the best way to get rid of it if possible. Because annuities are insurance contracts that involve fees and surrender charges, they must be part of a legitimate plan rather than a sales pitch. Ultimately, being a math-oriented financial planner is secondary to my call to be a fiduciary. Sometimes reaching a financial goal is more about peace of mind and less stress than living life inside a calculator.
Question 3: I am 77 years old and have always been the primary financial organizer for our household, but a recent health diagnosis with an uncertain outcome has me concerned about my husband’s future. We have saved six million dollars and have excellent health insurance, but since he has never been involved in the day-to-day management of our investments, I am worried he will be overwhelmed trying to figure out how to generate income if I become incapacitated or pass away. What are the best proactive steps we should take right now?
This is the high bar when it comes to one of life's greatest challenges. At the same time you are being hit with devastating news and a life that looks different than you expected, you’re also feeling the weight and responsibility of caring for a loved one who might not be wired to steward your family savings as well as you have. I would emphatically say there is no cookie-cutter response to this type of question. The financial planning needs to be incredibly sensitive to the moment and the human emotion to want to overly control things that are impossible to predict.
For someone in this position, the first priority is making sure a support network is in place. Grief and health challenges are more than enough to cloud any decision-making. Even if someone has been a DIYer for a lifetime and viewed an advisor as an unnecessary expense, this is a situation where staffing help could be really important and necessary. You need to find a CFP® professional with high competence, integrity, and the emotional intelligence to handle the heavy lifting and keep as much weight as possible off your shoulders.
The initial steps should focus on estate planning to ensure that Powers of Attorney, Wills, and Trusts (if applicable) have been updated based on these new circumstances. Having a financial planner who has permission to interact directly with your attorney can be a huge help in cutting down your time requirement and acting as a mediator between professionals during an already trying time.
Eventually, the questions about financial stewardship for the remaining spouse will need to be dealt with. It could be that simply having a professional involved through the illness and the outcome is enough to provide the peace of mind she is looking for. I would also encourage your planner to keep a close eye on Roth conversion opportunities as the health diagnosis becomes clearer. The passing of a spouse causes a survivor to transition from Married Filing Jointly to Single filing status. On a $6,000,000 IRA with large RMDs, this could lead to a significant surviving spouse tax shock if they don't take the opportunity to lock in today's lower married filing jointly rates while they are available.
Full Episode Transcript
Adam: Good morning and welcome to Retirement Tax Matters. I’m Adam Reed. This is Garrett Crawford, our resident CFP® professional. How are we doing this morning, Garrett?
Garrett: Doing good. I'm excited to be back again for another round of tax planning conversations.
Adam: Another week, and we're back at it again. I think we've been pretty consistent this year. Last year was kind of knocking the rust off and figuring out what it looks like, but we're trucking along here in 2026.
Garrett: So, what's on the docket today?
Adam: I think we're going to talk a little bit about guilty spending habits to segue us in. I don’t know about you, but—
Garrett: Nope.
Adam: You're perfect, right? For me, it's timely. We mentioned the Masters a couple of weeks ago, but Watches and Wonders just happened. This is a big event where Swiss, German, and Japanese watch companies release their new 2026 models. I'm a big watch nerd, and I came home the other night and said to my wife, Sydney, I’ve got a great idea. We have three young kids, so she was excited; she thought maybe it was a camping trip or something fun. I said, What if we sold the house, moved back in with mom and dad, and used the equity to buy some watches? She said that is a horrible idea and shut me down. But there's always next year; I'll keep swinging for the fences.
Garrett: It’s funny, I went to a conference with Adam a few months ago, and it is actually cool to have a hobby where you can connect with people. I saw how everyone wears their watch on their wrist, and if it's a nice watch, they like to show it off. It was fun watching Adam instantly connect with people over a watch that I would've never noticed or thought twice about. The watch community is a cool niche.
Adam: Someone either doesn’t care at all about your watch, or they think it’s the coolest thing they’ve ever seen. My poor wife—if you’re a watch person, you’ll get this—I’ll show her a watch and she says, Oh, that’s so cool. It looks just like the other one you showed me. And I’m like, You’re crazy, it’s completely different. Anyway, any guilty spending habits you want to confess live on air?
Garrett: Well, I know even for our YouTube thumbnail it says, Helping your spouse spend more. I think even though we are younger and married, that conversation happens a lot: What are you spending our money on? You look through the budget to figure out who is spending.
Adam: I don’t even have to look. It’s always Target at our house.
Garrett: As you were talking, I realized my thing is technological items that make my life easier. It’s simple things like electrical charging cables. I want the right cable in my car that goes the right distance, or I want to make sure I can charge my watch by my bedside table. But what if I'm traveling and don't want to touch that one? I have way too many cables for convenience. My daughter is about to turn 12, and I’m wondering if an Apple Watch would make life easier because we could text her. I’m always justifying technological expenses that could make life easier, but you look around and wonder if it actually does. Sometimes it’s more complicated.
Adam: One day, if there's time travel, we'll probably do reality TV where we drop a guy like you into medieval times and see how you do. You'll be asking where the charging cable is and they'll have no idea what you're talking about.
Garrett: I’m sure my wife would love for me to spend less money on charging cables. If she were here, her guilty habit would be sweatshirts. I go to our closet and she could wear a different sweatshirt every day for a month without recycling them. We laugh about it—she buys sweatshirts and I buy digital cables.
Adam: Fall in Tennessee is perfect sweatshirt weather. All jokes aside, let's jump into our topic. Something we see in our office a lot is a couple where one spouse is very financially motivated. Maybe it’s not even that they are Type A, but they have this idea that they want to provide and take care of things. Consequently, when one spouse passes, the surviving spouse might be in a spot where they don't have a gauge for what a $3 million balance really means for them. They don't understand what it means that the financial plan is in good shape. We’ve seen clients who struggle to spend after a spouse passes because they haven't spent decades developing those spending muscles. How do you navigate those conversations and help surviving spouses think through those topics?
Garrett: I’ve been practicing as a CFP® professional for nearly 13 years now. It took me a long time working in this industry to identify this as a real issue. For people in the $2 million to $8 million range, a top priority is making sure their spouse is taken care of if they die early. However, saving enough is only half the equation. If the spouse who dies is the one in charge, the remaining spouse often lacks the jargon and the language to process it. They see a statement for $2 million or $6 million and think, Wow, they really took care of me, but they have a hard time putting wheels on it. They often default to a scarcity model. They worry about running out of money, so they don’t touch it, hoping it just goes to the kids. I would challenge someone in their 60s or 70s to realize that as we grow older, things can become hazier. The goal is to solve the other side of the coin: how do we get a surviving spouse to spend enough so they don't feel guilty or afraid of running out?
Adam: Now I'm going to address the elephant in the room: annuities. A lot of people hear that word and it doesn't bring up a thought, it brings up a feeling—it makes them sick. Maybe they had a terrible sales experience. On the other hand, I had a client call last year who loved her annuity because she bought it in early 2020. Garrett, you’ve mentioned before that you have some aversions to them based on seeing annuities that weren't properly explained. But you’ve also said that, as a 38-year-old looking forward, you could see yourself in one one day. Help me understand, from a math-driven CFP® professional perspective, why they make sense and how they fit into a surviving spouse’s spending plan.
Garrett: In the accumulation phase of your life, I think that’s mostly black and white—you want to be very clear on why you’re doing that. However, as you hit the retirement transition, things change. As a planner, I don’t want my own biases to limit the tools in my belt. My personal bias is that when a financial product is overly complicated, my guard goes up. But let's say you have all this money saved in an IRA and you've solved the first side of the coin—having enough. The second side is how to get that money to the spouse. An income annuity for a remaining spouse could make a lot of sense. You could take a portion of your balance and put it into a deferred annuity that triggers automatic income at your death. They would get a check every month for the rest of their life. It protects their quality of life and forces them to take more money so they don't live on Social Security alone. Personally, I see where it would be a great fit for my wife because I know her tendency is to be conservative. Guaranteed income helps someone get over the hurdle of feeling like they are spending everything.
Adam: Everyone is wired differently. Can you touch on the technical side briefly? You mentioned IRA balances, but there are qualified versus non-qualified annuities. For high-net-worth retirees, why might a non-qualified annuity make sense?
Garrett: Since this is a tax planning podcast for retirees in that $2 million to $8 million range, we have to look at the long-term implications. The most challenging thing for a married person to think about is that at their passing, the surviving spouse transitions from Married Filing Jointly to a Single filing status. If you have a significant pre-tax IRA and Social Security, your tax bracket can easily jump from 24% up to a punitive 32%. If you use IRA funds to buy an annuity, that is forced income taxable at ordinary rates. However, with a non-qualified annuity, you use after-tax money. You still pay ordinary income rates on the growth, but it could be less of a tax hit for that surviving spouse. Thinking through the transition from joint to individual filing is a high-value decision.
Adam: This hammers home the idea that tax-return-driven financial planning isn't black and white. If someone recognizes that their spouse might struggle to spend, what are the first steps?
Garrett: Retirement Tax Matters is an extension of Providence Wealth Management in Knoxville, Tennessee. We are a fee-based RIA. Because we are fee-based, we have the ability to recommend and implement insurance products, but our goal here is to inform and give good ideas. If you think an income annuity would be beneficial, you should talk to a financial planner or an insurance agent who can get you a quote. Do your homework. Look for someone with integrity. You don't have to use an annuity—you can use an investment portfolio or a trust—but you should have a plan to help a surviving spouse overcome a scarcity mindset.
Adam: Check us out on Apple, Spotify, and YouTube, and be sure to download our year-end tax planning checklist. Make some projections—see what bracket your spouse would be in if you disappeared today. We appreciate you following along. I'm Adam Reed, and this is Garrett Crawford. We're Retirement Tax Matters.
Garrett: See you next time!