What if You and Your Spouse Plan to Retire at Different Times?
Married couples don’t always plan to retire at the same time. According to a recent study by Fidelity, 48% of couples disagree on the age at which they plan to retire. For others, circumstances like an unexpected job loss or health issue push spouses onto separate retirement schedules.
My wife, Diana, and I have discussed this issue on numerous occasions. While our ages are similar, she plans to retire several years before me. But we don’t see that as an obstacle. I enjoy working with and helping my clients. I plan to continue managing Apprise for as long as I can. We have discussed how I can do this while we also get to enjoy the quality of life in our later years that we desire. Fortunately, since the pandemic started, people have become even more willing to work virtually. Working virtually will allow me to do the things Diana and I want to do once she retires. At the same time, I will still be able to take care of Apprise’s clients.
When one spouse retires and the other keeps working, the couple must understand the effects on their finances, their schedules, and their long-term goals. These are the main issues Diana and I have discussed when we consider our future.
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 enjoying additional recreational activities 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 healthcare. 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 may have to jump on a plan offered by their spouse’s employer, or purchase healthcare on their state’s marketplace.
Healthcare 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 consider your retirement plan. If you and your spouse would like some help working through the above questions, let’s schedule an appointment. That meeting should help both you and your spouse work through these issues and find a plan that will get you both excited about retirement.
Many people misunderstand the true value of health savings accounts (HSAs). They think of them as a type of “use it or lose it” account. That rule applies to flexible spending accounts but not HSAs. If you’re in good health, and/or you can pay your out-of-pocket medical expenses from other funds, consider an HSA. This week’s first article shares some factors to weigh when deciding if an HSA makes sense for you and your family. If you have questions related to any of this week’s articles, please schedule a quick call.
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Here are the links to this week’s articles as well as a brief description of each:
1. Here’s how to weigh whether a health savings account makes sense for your 2023 insurance coverage.
Open enrollment season is upon us. I frequently share articles discussing the merits of health savings accounts (HSAs). Why? They can provide you with a triple-tax-free retirement benefit. If your employer offers a high-deductible health plan, should you consider it? As discussed in more detail in this article, good candidates for HSAs are those who have low healthcare costs. Choosing an HSA-eligible option can lower your premiums and allow you to increase your retirement savings.
2. The Ultimate Productivity Hack is Saying No.
Many – if not all – of us would like to increase our productivity. But how can we do that? Consider how many times we say yes to things we don’t want to do. What if we said, “no” instead? That could provide a big productivity boost. After all, not doing something takes way less time than doing it. Think of it this way: Saying yes costs us time in the future. Saying no saves us time in the future. In short, we waste more time and effort doing things that don’t matter than we waste by doing them inefficiently. If you believe that’s true, then eliminating things from your schedule will prove more beneficial than optimizing your ability to do things.
3. Here’s a tax-smart charitable giving strategy using money from your IRA.
In last week’s blog, one of the tax planning ideas I discussed related to optimizing your charitable contributions. Qualified Charitable Distributions (QCDs) represent one way you can enhance the tax efficiency of your charitable contributions. This article provides greater insights into how QCDs work. It also discusses the related benefits in more detail. Plus, it provides a reminder of some things to keep in mind when making QCDs.
4. 5 Good Habits That Might Cause Premature Aging.
Can doing something healthy become unhealthy? What if you do that good thing too much? What if you do it to the exclusion of other choices? This article shares five healthy habits that experts in nutrition, medicine, exercise, and more wish people would take breaks from. The suggestions are primarily directed toward those who want to stay in shape as they move beyond their 50s, 60s, and 70s. I found the third habit – you drink water when you’re thirsty – most surprising until I thought about it more. After all, waiting until you’re thirsty means you’re already dehydrated.
5. Navigating the Pain of Your First Bear Market.
Navigating a bear market such as the one we’re going through now is hard. That applies even if you’ve experienced one in the past – probably even moreso. As cited in this blog, on average, a bear market comes around about once every five years.:
Over the 50 years from 1970-2019, there were 7 recessions, 10 bear markets, and 4 legitimate market crashes with losses in excess of 30% for the U.S. stock market. Over the previous 50 years from 1920-1969, there were 11 recessions, 15 bear markets, and 8 legitimate market crashes with losses in excess of 30% for the U.S. stock market.
Whether you experienced a bear market in the past or not doesn’t make going through the current one any easier. Those who are still working should automate their savings as much as possible. You should “Pay Yourself First.” Net savers should derive long-term benefits from the current downturn.
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We hope you find the above articles valuable. We would be happy to address any follow-up questions you have. You can complete our contact form if you would like to talk to us about financial topics, including your investments, creating a financial plan, saving for college, or saving for retirement. Once you do that, we will be in touch. You can also schedule a call or a virtual meeting via Zoom.
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For firm disclosures, see here: https://apprisewealth.com/disclosures/
Phil Weiss founded Apprise Wealth Management. He started his financial services career in 1987 working as a tax professional for Deloitte & Touche. For the past 25+ years, he has worked extensively in the areas of financial planning and investment management. Phil is both a CFA charterholder and a CPA.
Located just north of Baltimore, Apprise works with clients face-to-face locally and can also work virtually regardless of location.
