Many couples dream of retiring together to realize long-held plans. They imagine themselves traveling to their bucket list destinations. Others are thrilled to spend their extra time with family and not having to worry about waking up early the next morning for work. They coordinate their exit dates then often retire within a couple of years of each other. However, there are reasons why some couples have asymmetric retirements. Some are involuntary due to factors such as business closures, disability or caregiving for a loved one.
However, there are some general relationship challenges introduced to simultaneous retirement.
Couples don’t always see eye to eye. A Fidelity Couples and Money Survey of more than 1,600 couples revealed that 43% disagree about what age they plan to retire, 54% disagree on how much should be saved by the time they reach retirement age, and 49% say they have ‘no idea’ how much should be saved by retirement age.
Some challenges stem from resentment, differing interests and juggling calendars. Picture a working spouse being greeted at the day’s end by the retired spouse asking, “What’s for dinner?” Or a working spouse saying, “Please find something for my retired husband to do! I didn’t marry him to have lunch every day.” Routines can be disrupted when transitioning from full-time work to retirement.
So, is it best to retire at the exact same time or staggered? Here are four reasons for one of you to continue to work after the other has retired:
Build Your Nest Egg
There are only two things you can do with money – save it or spend it. Retiring later provides three benefits. You can contribute more to your 401(k), the earnings can compound longer, and you can defer withdrawals.
Increase Social Security
Benefits might increase from age or additional covered earnings (and may increase benefits to your spouse). If you wait until full retirement age (FRA), you may be entitled to 100% and your spouse 50%. However, if you drew Social Security three years earlier, your benefit might only be 80% and your spouse 37.5%. For every year to defer Social Security from full retirement to age 70, your benefit increases 8%. The maximum benefit at age 70 in 2021 is $3,895 a month.
Too Young for Medicare
Typically, company health benefits end when you retire. Fewer than one in five large firms offer retirees health coverage. It may make sense to stay employed with the company offering healthcare until you’re Medicare eligible.
You Love Your Job
There are non-financial reasons people continue to work. These include sense of purpose, social engagement and value. How many 20-somethings does it take to replace a person with 45 years of knowledge, experience and relationships? And as someone once said to me, “once you get off the horse, it’s hard to get back on.”
I encourage you and your significant other to discuss these three questions to help align expectations and set the stage for improvement:
- If time and money weren’t a concern, what would your retirement look like? What are you doing and with whom?
- What does your job provide that you will miss (and need to replace) in retirement?
- How will your physical and mental health shape your retirement?
Make not working work for both of you. It may require you to apologize more often, be quick to forgive, and embrace opportunities to develop new passions and routines. And it’s never too early to start planning your retirement. Secure your future wisely.