The following is adapted from the book, Keen on Retirement - Engineering the Second Half of Your Life.
Even if one spouse is the primary breadwinner and the other more of a homemaker, couples have to plan for retirement together. Your retirement planning process and your retirement period itself will be much more successful if you put the time in now to think about both parties’ needs. And if a sudden health issue should make it hard for one of you to handle the family’s finances, both people need to understand how the bills get paid and how your investments are working.
These five special considerations for retiring couples are big topics at our annual checkups with married clients.
1. Think About the Timing
When you’re single, chances are you’re more likely to be able to retire any time you feel the time is right, if it’s affordable. And even if retirement is a financial stretch, you could sell your house, downsize your lifestyle, or do whatever you need to make it happen--without discussing it with anyone else.
If you’re married and thinking about retiring, you’ve got to set a date together. If your spouse is working too, it’s even more complicated. Are you going to retire together? How will your marriage hold up if one person is done working and the other is still employed? How are you going to cover healthcare needs until you’re both retired and old enough for Medicare?
The earlier you start planning your retirement, the earlier you can plan a retirement date that works for both of you. You can dovetail the elements of your blueprint, so it all comes together at the end for you to retire simultaneously, or at least near enough in time to avoid friction.
2. Understand the Costs
To create that retirement blueprint, the first thing you must do is understand the costs of retirement. Are you going to stay in your current home, or scale down to a small rental or an RV? What costs are fixed and what costs can you adjust to make your retirement funds last longer?
You should know how much it would cost to be retired for one year, five years, 10 years, and 20 years, at least. How do your funds stack up against those predictions?
Remember that people usually spend the most money at the start, and, at the end of their retirement period. When they first retire, people tend to spend money on travel and hobbies they’ve put off while they were working. And at the end of retirement, healthcare and living expenses can increase drastically if you need a high level of medical care or need to move to a nursing home or assisted living facility.
Don’t forget too, that women generally live longer than men and may need retirement funds and medical care for years after their spouse is deceased. That’s why it’s very important married women don’t just let their spouses “handle the money.” The more involved women are at every stage of the couple’s planning process, the more confident they’re likely to feel about piloting their finances solo if need be.
3. Take Care of Estate Planning
If you have a spouse or life partner, doing some detailed estate planning is absolutely vital. You want to make sure they are taken care of in the event of your death.
This is particularly important if your spouse has not been a breadwinner or has relied on your finances throughout the marriage. Go over everything in your estate plan together, so you are both equally savvy about how assets are to be distributed.
This is often a good time to bring in a financial advisor, if you haven’t worked with one already, to ensure everything has been taken care of properly from all vantage points.
Don’t forget to write out living wills and designate a power of attorney. This will make your wishes known regarding resuscitation and life support in the event advanced medical care is needed. The time of an actual illness or emergency is too stressful for most spouses to make on-the-spot decisions.
4. Imagine Post-Work Life
Have you thought about what your post-work day-to-day life would be like? Have you shared that with your spouse?
Many people have a vision of retirement that, to put it mildly, doesn’t jibe with their spouse’s idea of retirement. You might imagine lounging around the house all day and eating all your meals together, while your spouse was hoping you’d be busy with a hobby. Have you thought about the division of labor once you’re both home?
Before retiring--hopefully, long before retiring--you should paint a picture of your retirement life at each stage of retirement: early, middle, and late. Get as granular as possible and put your goals on a timeline. Without that level of detail you may not have the funding you need to make your dreams a reality, nor will you be able to communicate with your spouse about how you envision retirement, so you can develop a plan that meets both your desires. My Vision Board exercise is a great way for you and your spouse to start thinking about how each of you wants to live in retirement, the things you look forward to doing together, and the things you want to explore on your own.
5. Keep Up Your Social Networks
People who work hard may find it challenging to maintain their social contacts, but retirement is the time to either bolster existing friendships or seek out old ones that have fallen by the wayside of busy lives. If you’re part of a couple, ironically, this is more important than ever.
Why? Because you don’t want to make your relationship with your partner your entire life. It can put too much stress on a marriage, and it can result in insurmountable grief if one spouse passes away.
Having a circle of friends means you can enjoy activities both in a group and individually, even separate from each other. If you need support in a crisis, you’ll have it.
Retiring as a couple can be one of life’s greatest joys… or it can be a source of difficulty in your relationship. It all depends on how you approach it. Take the time to plan together, discuss what you both want with your fiduciary advisor, so that you’re more likely to have the kind of retirement that you’ve always dreamed of: a true partnership.
For more advice on retirement planning with a spouse or partner, you can find the book Keen on Retirement: Engineering the Second Half of Your Life on Amazon.
Bill Keen is a CHARTERED RETIREMENT PLANNING COUNSELOR℠ and independent financial advisor with more than 25 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he specializes in providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
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