Timing Strategies for Couples Retirement
So many working couples are waiting for the day when they can retire together. Be that as it may, couples should clearly assess all the risks, and weigh whether it is wise to retire at the same time. There are both emotional and financial implications in this situation, compared to when one spouse is still at work when the other is already retired. It is important to make a retirement plan as early as possible when there is still plenty of time before retirement. Each spouse should be personally aware of the risks, pros and cons.
Why retiring together is risky
One spouse can work longer and save for Social Security after retirement age. Then the benefits would go up. Also, the spouse who works a few years longer will be able to depend less on his or her retirement savings.
The financial impact
"Retiring five years after your spouse is not a bad option for couples who are trying to save more money for a common budget," says Jane Novak, a financial consultant at Wealth and Pension Services Group Corporation.
We can give you an example that shows how much five extra years can solve a married couple:
Jane and Harry Brooks are in their 60s. Their earnings are about $40,000 annually. Both Jane and Harry come from families with good longevity, and each plans to live to be 90 years old. Jein and Harry expect to retire at 65. If they don't stop saving, they will have $300,000 by age 65. When they both reach age 67 (full retirement age) they will be eligible for full Social Security. The Brooks family will be hoping for $24137.75 a year from their retirement account. Thus, the retirement budget will be exhausted by the couple's 90th birthday. If they qualify for Social Security at age 67, Harry & Jane will expect an annual benefit of $18850. That would bring their total annual income to $61837 a year, which carries a 30% reduction in income when compared to their pre-retirement income of $80,000. But if Harry will be able to work another five years, he will increase his dues to save another $30,000 in his retirement budget.
If the Brookses wait to withdraw money from their retirement plan until Harry retires in his 70s (after all, he will still be on Social Security from age 67) and Jane is on Social Security, the couple can expect to have about $437,000 in assets. There will also be increased Social Security payments for Harry of $28332 per year (instead of $18850).
The example of the Brooks couple perfectly illustrates the economic implications, in which a few more years of work could help the couple splendidly in retirement. The triple effect of increased Social Security benefits, increased retirement savings, and reduced time to spend those savings can do a great job of helping you retire safely and enjoy all the financial benefits upon retirement.
Impact on health insurance
Health insurance is also a critical factor. If Harry is able to work another five years, as in the above example, he will keep his health insurance through his employer, which may be more or less costly compared to Medicare.
Individuals can count on Medicare starting at age 65. If the couple is not the same age, the younger spouse will need to find other insurance if they are both retired when the older spouse turns 65.
Emotional Grounds for Retirement Separately
Retirement can be an emotionally difficult time for a person. Some go through the loss of a job easily, while others have a hard time. When both spouses retire, they both have to be at home, without the opportunity to be distracted by work and immersed in it. An unexpected change can disrupt an established routine that the couple is used to. Therefore, it is much easier if one of the spouses will go through this at first, and the other will be there to emotionally support their couple, because it may be hard for them to adjust to this way of life right away.
If both spouses are in a state where they are trying to find their new identity, it can seriously interfere with their relationship when they both have to take their emotions out on their partner.
On the other hand, many people look forward to retirement in order to do the things they love, devote more time to their hobbies, learn some interesting things, perhaps start their own business or travel the world. So, don't make the difference in retirement too much. In any case, it's worth discussing with your spouse.
Retirement can be a serious ordeal for spouses and supporting each other will definitely have to help ease the situation. In any case, life dictates its rules and forces you to change plans you may have made before.
Either way, whether you decide to postpone retirement or stop working at the same time, think about it ahead of time to make the process easier.
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