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Should married couples retire together?

Feb 14, 2024, 7:54:27 PM | Reading Time: 5 minutes

When talking about retirement, you’ve likely seen the images of two people walking along the beach holding hands or riding bikes through the park. Retirement is often considered a chapter a couple enjoys together, where they’re free to travel, visit friends and family, or participate in different activities. While this may also be what you envision for the future, does it make financial sense to enter retirement at the same time or stagger your start dates? Here are several factors to consider as you plan for retirement and decide if you’ll cross the work-life finish line together.

Should married couples retire together?

Should one spouse retire before the other?

Often, it can be wiser for you and your spouse to retire at different times. This strategy allows one person to begin collecting retirement income, like pension or Social Security, and the other to continue earning a paycheck and building savings. Many things can influence this decision, including your current retirement preparedness, level of debt, and health status. One of you may wish to retire sooner to enjoy a healthier, more active retirement, while the other has health insurance through a current employer and wishes to keep that coverage.

As you talk about the future, talk about your shared goals, how your income and expenses line up, and what timing makes the most sense for each of you that will support financial success for years to come. With those details in mind, there are several steps you can take to plan your future together, even if you have different retirement dates.

Retirement plan questions for couples

Even if it makes more financial sense for one of you to retire after the other, it’s important to still be on the same page about what each of you expects from your later years. Going through a checklist of questions together can allow you to become informed about each other’s wishes so you can evaluate which options can support your desired lifestyle and how to create a financial plan that helps make these dreams come true. Here are some questions to consider.

What is your ideal retirement lifestyle?

To plan effectively, you both need to know what you expect from retirement. Will you be living a life like you do now? Do you want the same financial freedom, or will you reduce your spending?

When would you like to retire?

Everyone’s retirement timeline can differ based on personal preferences and financial preparedness. Discuss with each other when you would like to retire so you can set a goalpost and plan accordingly.

How would you like to spend your time?

Some couples may spend retirement traveling, while others may downsize or move closer to their children. Picturing how you’ll be spending your days helps you determine the amount of income needed to support your lifestyle and if your savings will last as long as you do.

Where will you live in retirement?

Many couples choose to age in place, while others wish to move to a smaller home or retirement community. Be sure to consider home and yard maintenance, potential renovations needed to make your house more accessible, and whether your current location is close to necessary health care providers.

Will you work part-time?

Not everyone wishes to completely stop working once they reach retirement age, or they may need the income to support their day-to-day living and fill any gaps in the budget. Discuss with your partner if one or both of you plan to work part-time, what that looks like, and how long you wish to be employed.

When will you claim Social Security benefits?

An important part of the retirement planning conversation is determining when each of you will claim Social Security. Remember, you can technically start claiming your benefits at age 62. Doing so may alter the nature of your benefits, so be sure to review Social Security information in detail.

Once you’re on the same page about who should retire first and who should continue working a little longer based on your financial goals and anticipated lifestyle, it’s time to set a target date to help keep you both on track. Couples can work with a financial professional who can review their assets and future goals to help determine when a sensible time is for each of them to retire.

How to prepare when one spouse retires before the other

When one of you retires before the other, you may decide how much of your expenses will be paid via the working spouse’s income and whether the retired spouse will need to dip into your retirement savings account to supplement expenses. If you can delay claiming Social Security benefits, you can help maximize that money down the road.

Along with the additional income and potential health insurance, having one of you still employed can also allow you to continue contributing to your retirement accounts and creating more savings for the future. As you create a financial plan, you can determine what expenses this income will be covering, whether it’s for essentials or will go toward building an emergency fund or future savings goal.

How do Social Security benefits work for spouses?

When you file for your retirement benefits, your spouse may be eligible for a benefit based on your earnings if he or she is at least 62 years of age or has a dependent child in their care. If your spouse is eligible for a benefit based on his or her earnings and that amount is higher than the spousal benefit, they will receive it. These will be important calculations as you plan for the future and determine your retirement timeline.

How mixed retirement couples can maximize spousal retirement benefits

As you develop your retirement strategy and determine when to collect Social Security, you may compare your and your spouse’s benefit estimates. In most cases, the higher earner will likey hold off in claiming Social Security to maximize their benefit amount and potentially increase the spousal benefit amount. Spousal benefits can be as high as 50% of your benefits depending on age (the longer your spouse waits beyond age 62, the more they can collect). Again, the spousal benefit may be higher than what your spouse earns from their benefits, so it’s a good idea to work through the numbers and determine how to make the most of your retirement benefits. It’s a good idea to review spousal options in the Social Security Administration website.

Can I collect spousal benefits before I retire?

Yes, you can collect spousal benefits even if you aren’t retired, as long as you’re 62 or older. However, if you haven’t yet reached full retirement age, your spousal benefits will likely be reduced since it pays to wait longer before collecting these benefits.

Coordinating your benefits with your spouse can help you make the most of your retirement income and create a strategy to support your short- and long-term financial goals.

Retirement can look different for each person, but as a couple, you will want to determine how you can support each other’s dreams and create the savings that will allow you both to live a fulfilling life as a retiree. Meeting with a financial professional can offer valuable guidance in determining the best time for you each to retire, if there are income gaps that need to be filled, and how solutions like annuities and life insurance can supplement an overall financial strategy. With a team approach to planning, you can make sure you’re both retirement-ready and can look toward the future excitedly.

 

 

The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.

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