How a Couple Can Get the Best ROL When Retiring at Different Times
Married couples don’t always plot retirement on the same $Lifeline point. According to a study by Fidelity, 43% of couples disagree about what age they plan on retiring. For other folks, circumstances like an unexpected job loss or health issue push spouses onto separate retirement schedules.
When one spouse retires and the other keeps working, it's important that the couple understands the effects on their finances, their schedules, and their long-term goals. Here are three important conversations that couples should have about syncing two retirements to a shared Life-Centered Financial Plan.
1. Discuss your reasons and goals.
If you and your spouse could both comfortably retire together, it's important to ask each other, Why? And why not? What are the core money and life issues that put you on different retirement timelines?
Does one of you love your job and the other can't wait to stop working?
Is one of you worried about running out of money in retirement?
Are you picturing a blank weekly schedule you don't know how to fill?
Are you worried you're going to drive each other crazy?
Retiring -- or not retiring -- isn't necessarily going to solve any of these issues. Talk to each other about the things you want to accomplish separately and together in the next part of your lives. Take out a blank calendar and plot out what your Ideal Week without work might look like. And if you're not on the same page about your progress towards financial goals, schedule an appointment with your financial advisor. Hopefully these conversations will give both of you some clarity about the best time for each of you to retire.
2. Discuss schedules and responsibilities.
Even if the working spouse chooses to keep working, seeing their retired spouse lounging around and playing an extra round of golf could breed resentment. Have a conversation about who handles what at home. The retired spouse might take up a few extra responsibilities, like grocery shopping and cooking meals. If the retiree is handy, he or she might make repairs and remodeling projects part of their new retirement routine. And scheduling a weekly lunch date with your working spouse could be a nice break for both of you.
But the new retiree also shouldn't feel guilty about enjoying retirement. If money isn't an issue and the working spouse regrets missing out on weekday tennis and sprucing up the spare bedroom, maybe it’s time to make retirement a shared life transition.
3. Review your financial plan.
Retiring separately can create some complications when it comes to health care. If the retiring spouse is leaving their employer-subsidized plan before age 65, he or she won't be eligible for Medicare. That means the retiree will have to jump on a plan offered by their spouse's employer, or purchase health care on their state's marketplace.
Health care is just one line item on your household budget that might go up as your monthly income goes down. Are you and your spouse prepared to tighten the family belt? Or are you going to spend more on recreational activities now that one of you isn't working? Are you considering other sources of income, such as taking Social Security before full retirement age, making early withdrawals from your retirement accounts, or working part time?
Much like deciding when to retire, there are no right or wrong answers to these questions. What's most important is coordinating every part of your Life-Centered Financial Plan so that both you and your spouse get the best life possible from your money in retirement.
This might be a good time to revisit some of our retirement coaching tools, such as your $Lifeline, Visioning, and Ideal Week in Retirement. Let's set up an appointment so both you and your spouse can work through these tools and find a plan that will get you both excited about retirement.