For couples of varying ages, decisions surrounding retirement can be complicated. If there is an age gap between you and your spouse, here are a few considerations we take into account when working with you on your retirement plan.
Consideration #1: Retirement Dates
One of the most critical details to consider is the start of your retirement. If one spouse continues working while the other is retired, how will the dynamic shift? Alternatively, will you choose to retire at the same time?
Staggering the start of your retirements can be beneficial for some. For example, if the younger partner continues to work, they may maintain employer health coverage until both partners are eligible for Medicare. Additionally, their earnings can reduce the need to minimize the portfolio, extending the length of their savings.
It’s possible that one spouse retires early so that the couple can stop working at the same time. Or perhaps the older spouse loves their job and has no problem working for a few more years. Ultimately, the decision comes down to you as a couple and your approach to the circumstances. Either way, it’s crucial that you consider your retirement dates because the decisions you make regarding the beginning of your retirement chapter will impact how you plan financially.
Consideration #2: Social Security
Another key detail to be considered strategically is when to begin collecting Social Security. If an age-gapped couple retires at the same time, the younger spouse may receive reduced benefits. Alternatively, if the younger spouse begins collecting benefits at age 62, their lifetime benefit could be reduced exponentially.
If the older spouse makes more than their partner, it may make more sense for them to delay taking Social Security benefits for a few years. By waiting, the older spouse’s benefit will grow eight percent each year past their Full Retirement Age (FRA) up to age 70.
Consideration #3: Your Investments
As retirement nears, couples may consider altering their investments from, perhaps, a more aggressive, growth-oriented portfolio to a more conservative, wealth-preserving one. Age gap between spouses is a definite factor in this consideration. Fortunately, our team is ready to help you model different scenarios so we can make the best investment decision based on your circumstances.
Consideration #4: Health Costs and Life Insurance
There is a key advantage to being in a partnership with an age-gap: the younger spouse may be able to care for the older spouse if needed. On the other hand, the younger spouse’s long-term care needs are then put into question. Purchasing long-term care policies for one or both spouses should be considered as a possible part of your retirement plan.
No matter your circumstances, be assured our team is ready to build a retirement strategy, customized to fit your needs and goals.