It may be tough for couples to talk about retirement, but it’s important to make sure that you plan together. As you approach retirement as a couple, do you plan to coordinate your retirement dates or do you plan to retire at separate times?
You may have great reasons for retiring years apart, such as financial considerations or lifestyle differences. However, it is important to plan for life when your partner has retired but you haven’t (or vice versa).
Start by comparing your financial plans for retirement. If your spouse is retiring early, will his or her spending habits change to adjust to the lesser income? Talk with your spouse and set up a post-retirement budget to review (and remember that even though you are still working, you should cut your personal spending, too).
It’s best to test your budget before retirement begins. Start living as if you were down to post-retirement family income before the initial retirement date – perhaps one year – and see if you can tolerate that level of income loss. This has double benefits: it will get you in the proper retirement spending habits or force you to adjust your plans, and you will have extra money salted away for whatever choice that you make.
If you decide to adjust your income, run through several scenarios to decide whether retirement should be delayed or whether the gap can be filled by different income sources. Are there different types of lower paying or part-time jobs that your spouse might find interesting? Perhaps your spouse’s current job can be adjusted to a part-time or consulting role that allows more free time (if free time is the objective).
If you decide to fill the financial gap by drawing out of IRAs or 401(k)s, or claiming Social Security early under either direct or spousal benefits, be very careful. Extend your budget out multiple years into the future to make sure you are not shortchanging your latter years – and increase the miscellaneous expenses in later years to account for inflation, increased medical expenses, etc.
Consider insurance and medical coverage in your financial plans, along with your spouse’s state of health. Can your spouse be easily added to your work plan? Is Medicare an option, and if not, are there affordable insurance options available? With the constant change (and threats of change) in the health care law, keep an eye on changes that may affect your retirement plans.
Lifestyle changes may also cause conflict if not discussed beforehand. Your newly retired spouse may decide that he or she wants to travel at times when you are not able to, or engage in a new pastime that costs significant money and/or draws in different groups of friends and acquaintances. Conversely, if you are together more often than you used to be on a daily basis, you could get on each other’s nerves. (It’s hard to put a price tag on that!)
Make sure that you schedule the correct balance of “together time” and “me time” to accommodate the lifestyle changes. As you review your plans, don’t forget to include household responsibilities and other activity changes that can simmer and cause problems if the difference in expectations is not addressed.
Ultimately, every couple decides what the best retirement scheme is for their situation. The common thread is change; the common approach to avoiding potential conflicts is communication. Talk to your spouse before retirement so you know what each of you considers the most important things about retirement and what areas are open to compromise. Very few people have exactly the retirement they planned, and consideration of your spouse’s needs is important to maintain a happy retirement as you both make adjustments.