Three Ways Retiring at Different Ages Might Affect You and Your Spouse’s Retirement Plans
Planning Together Ensures You'll Understand One Another's Expectations | By: Randall E. White, CFP®, RICP®, CRPC®, CMFC®
Nearing retirement is an exciting time. It’s the culmination of the many years you’ve spent working hard and diligently following your retirement plans, and for many, it can be an incredibly meaningful and rewarding phase in your life.
Retiring is a very personal decision, and everyone must decide their own perfect timing. This means that couples aren’t always going to be retiring at the same time. Should you find you and your spouse in the position of retiring at different ages, here are three things you should know.
1. You’ll get breathing room with your retirement budget.
After retirement, your budget is going to need some major changes to adapt to a new lifestyle. For starters, you’ll have to establish a new income for yourself whether through Social Security, pensions (if applicable), and your savings. You’ll also be spending less on work-related expenses such as gas, parking passes, dry cleaning, or work clothes. However, depending on your situation, you may have some new expenses added to the mix, such as health insurance for you and/or your spouse and spending money on your new retirement lifestyle.
If you and your spouse aren’t retiring at the same time, that affords you a bit more leniency as you adjust to your new lifestyle. After the first spouse retires, you will both be able to get a better sense of what your spending habits in retirement will look like and you can adjust your savings and money habits accordingly.
2. You get to put the brakes on tapping into your Social Security and other savings.
Since only one of you is retiring, that means the other spouse is still working and collecting a paycheck. Depending on the income amount and your lifestyle, this could afford you the opportunity to postpone tapping into your retirement nest egg and delaying having to claim Social Security. Both of these options will enable you to lengthen the life of your money and improve your long-term financial picture.
For example, although 62 is the age at which you are eligible to begin receiving your Social Security benefits, waiting until you are older will allow you to lock in a higher monthly benefit for the rest of your retirement.
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3. You will both have to adjust to a new relationship dynamic.
Although only one of you will be retiring, both of you will be affected, as the retirement will lead to significant changes in your relationship dynamic. For instance, the spouse who is still working may consider their paycheck to be ‘their money’ as opposed to a shared resource. You both must be mindful of this. Remember, there are a plethora of ways that one can contribute to a household and a relationship and it takes more than just money to make a household functional.
There might also be an expectation that, while the one spouse is getting up and going to work each day, the retired spouse is at home taking on more household chores since they no longer have work obligations. If this is an expectation, make sure to discuss it thoroughly. If the two of you aren’t on the same page when it comes to expectations, it could allow for tension and disagreements to arise.
When one half of a couple retires, it can bring with it some major benefits as well as some potential pitfalls. It’s important that you sit down with your spouse and talk through your expectations and goals for life in retirement so that you are both prepared. Decide together what your spending habits will be, how you plan on covering expenses, and who exactly will be responsible for what as you begin this exciting new chapter in your lives.
Here at TriCapital, we value your relationships and retirement goals, and it is important to us that you and your family are able to enjoy every benefit that retirement can bring. If you and your spouse are planning on retiring at different ages and would like guidance In creating a plan that will maximize the benefits of your situation while minimizing the pitfalls, please contact us today.
Securities offered through Triad Advisors, LLC, member FINRA/SPIC. Advisory services offered through TriCapital Wealth Management, Inc. TriCapital Wealth Management, Inc. is not affiliated with Triad Advisors, LLC.