Will Your Death Double Your Spouse's Tax Bill? 4 Ways Couples Should Prepare for the Widow's Penalty

Mature good looking couple talking while sitting on sofa at home.

Jim and Pam are a hypothetical couple I use with clients to illustrate what the numbers in a retirement plan can look like. They're both 62, have $2.5 million in pretax retirement accounts and $54,000 a year in combined Social Security benefits when they retire. On paper, they've done everything right.

But when Jim dies at 75, Pam's financial picture changes in ways they never planned for.