Decisions surrounding retirement are rarely simple. This further becomes the case when there is an age gap between couples, resulting in differences in retirement dates, life expectancy, health and more.
For couples of varying ages, traditional retirement advice may not always be fully applicable. Their retirement savings will need to support two individuals potentially navigating different life and career stages. If there is an age gap between you and your spouse, here are a few considerations to keep in mind.
Consideration #1: Your Retirement Date
One of the most critical factors to consider is the start of your retirement. If one spouse continues working while the other is retired, how will the dynamic shift? Alternatively, you may choose to retire at the same time.
Staggering retirement dates can also be beneficial. For example, if the younger partner continues to work, they may maintain employer-sponsored health coverage until both spouses are eligible for Medicare. Additionally, their earnings can help reduce withdrawals from the portfolio, potentially extending the life of retirement savings.
It’s also possible that one spouse retires early so the couple can transition into retirement together. Or perhaps the older spouse enjoys their work and chooses to continue working for several additional years. Ultimately, the decision depends on the couple’s preferences and financial circumstances. Regardless of the approach, it is important to recognize that the timing of retirement can significantly impact overall financial planning.
Consideration #2: Social Security
Another key decision is when to begin collecting Social Security benefits. Each spouse’s claiming age independently affects their benefit amount. If the younger spouse claims benefits as early as age 62, their monthly benefit will be permanently reduced compared to waiting until full retirement age, which can significantly reduce lifetime income.
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 70.2
Couples often coordinate Social Security claiming strategies, as the timing of each spouse’s benefit can impact overall household retirement income.
Consideration #3: Your Investments
As retirement approaches, investment portfolios often shift from a more aggressive, growth-oriented allocation to a more conservative, income- and preservation-focused strategy. If there is a significant age gap between spouses, it may make sense to maintain a slightly more growth-oriented allocation than typical for same-age couples. This can help support long-term growth potential, particularly for the younger spouse in later retirement years.
While this approach may increase exposure to market volatility, the younger spouse’s continued earnings (if still working) may help offset short-term fluctuations through ongoing contributions
Consideration #4: Health Costs and Life Insurance
There is a key advantage to being in a partnership with an age-gap: the younger spouse will likely 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 insurance that primarily covers the younger spouse may be a useful planning strategy.
No matter your circumstances, there are retirement strategies designed to support the unique needs of couples with age differences. With thoughtful planning and a clear understanding of your goals, you can create a retirement strategy that helps provide confidence for both spouses throughout the years ahead. If you and your spouse have an age gap, now may be the right time to review how your retirement timeline, Social Security decisions, investments, and long-term care considerations fit together. Contact your Patriot advisor today to review your financial plan and ensure your strategy is aligned with your vision for retirement.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.