There was a time once when it was common – expected, even – for a married couple to retire at the same time. But things have changed. In today’s society, there are far more two-career couples who stagger retirements rather than call it quits together, making retirement planning even more important.
AARP estimates that less than 20 percent of couples will currently even retire in the same year. These “out-of-sync retirements” could be the result of a wide age gap between the spouses, insufficient savings for retirement, a forced or unplanned retirement, or even just that one partner chooses to continue working.
Retiring at different times isn’t necessarily a bad thing. In fact, staggering your retirement with your spouse can have many financial and emotional benefits. The key is discussing your plans, with your spouse and your financial advisor, ahead of time. Juggling two retirements at two different times with two different sets of consequences requires careful retirement planning and open discussions.
If you and your spouse fall into the overwhelming majority of couples who will wind up retiring at different times, years apart, for one reason or another, there are some important conversations you need to have and careful retirement planning you need to do. The questions you’ll have to ask and issues you’ll have to figure out aren’t just financial; they’re also practical and emotional.
What would retiring at different times mean for you, your partner, your marriage, your home? How will a his-and-hers retirement impact your budget, spending and retirement goals?
The team at PAX Financial Group has compiled the following 5 concepts to consider and discuss with your spouse to make the transition into retirement as smooth as possible for both of you.
Staggered retirements will undoubtedly mean some big adjustments for both spouses; changes that can put even the happiest of marriages to the test, especially in situations where the retirement of one spouse happens unexpectedly (due to job loss or health concerns, for example).
It’s important to remember your plans for retirement. Are you hoping to relocate, travel, start your own business? If your spouse is still working, how will those plans be affected? How will you spend your days if your spouse is still working and your shared plans are still years away?
Another thing both partners will have to acknowledge and accept is that the working spouse might envy the retired spouse’s freedom and free time, while the retired spouse may resent the working spouse’s commitments, which prevent the couple from doing things like taking spontaneous vacations.
If navigating retirement on your own, before your spouse, retirement classes can help. Check out PAX Financial Group’s upcoming events.
Have an open and honest discussion about your expectations with regard to household responsibilities. Talk about who will do what, and how everyday chores, like grocery shopping, housecleaning and laundry, will get done and by whom.
What new roles will the retiring spouse take on? What tasks does the working spouse expect help with?
Both spouses will need acknowledgement and support: The recently retired spouse will have a lot of free time, and possibly, a lot of alone time. On the other hand, the spouse who remains at work may have trouble establishing the right work-life balance.
Living on a partially fixed income will probably change your budget and spending. Having one spouse who is still working might be a good thing, if you can use the working spouse’s income to cover living expenses and put off starting to take withdrawals from your retirement accounts.
Since you will soon be a one-income family, it’s important to discuss how you will adjust your budget accordingly, and what your lifestyle expectations will be. Can you maintain your two-income lifestyle on the working spouse’s income alone? Should you start taking your Social Security benefits? Have a discussion with your financial advisor. If not, what expenses can be cut back? Remember, deciding to take your Social Security benefits is a decision that can’t be undone.
Another aspect to keep in mind is that the retiring spouse may begin to have experiences and participate in activities that incur costs, as they pursue new hobbies or take trips. Don’t forget to include these additional expense items in your new budget. Use this recent blog post as a conversation starter: Marriage and Money: 5 Tips for Making it Work.
Even after the first of the partners retires, keep the conversation going. Don’t forget that just because you may have retired, your spouse hasn’t, and when that happens, another adjustment will be made, likely for both of you. Other issues could arise at this point, such as healthcare. At PAX Financial Group, we see so many people forget to plan for health insurance coverage after a second spouse retires. Unless both spouses will be at least 65 years old, you may not be eligible for Medicare.
Read our recent blog post: Everything You Need to Know About Retirement Healthcare.
Another oversight we see retirees make is not considering the emotional changes that retirement can bring. Retirement conversations shouldn’t just be about money and finances!
In order to avoid spending your Golden Years unhappily ever after, talk as a couple about the potential lifestyle shifts you and/or your spouse are likely to experience, before they happen. Discuss ways the retired partner can spend their new free time. Be honest if your goals and interests are different than your partner’s, and be understanding and patient if your spouse’s goals and interests are different than yours.
It’s important for couples to thoroughly discuss all aspects of retirement planning, from timelines and finances to lifestyle and household expectations. Failure to have these conversations, and explore them fully, openly and honestly, can easily result in resentment, arguments and disappointment, surely not how anyone dreams of spending their retirement years.
Make sure you’re both clear and upfront about what you want from this transition – and what you don’t want. Working with a financial advisor, especially if the discussions unearth different goals and expectations for retiring, can help a couple navigate retirement, remember they’re on the same team and work toward the same ultimate goal.
At PAX Financial Group headquartered in San Antonio, TX, we help many clients navigate these discussions and stay on track. If you’re not currently working with a financial advisor, there’s no better time to start than now. Schedule a no-obligation conversation with our team to see how we can help.
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