Society of Certified Senior Advisors: Should You Retire When Your Spouse Does?

Couples often plan to take their leap into retirement together … but there may be a better approach.

One in four couples exit the workforce within a year of each other, according to research. But this planned symbiosis can have unintended consequences.

It seems natural to start retirement together. Isn’t this what you’ve waited for, to begin a new phase of life as a couple, just as you’ve faced so many other joys and challenges? Many husbands and wives have planned this moment for decades, eagerly anticipating time shared with family and friends. Others have looked forward to more time together, free from the stress and confines of the work environment. But most have never stopped to consider the financial implications of such a move.

Know Your Savings Number

Part of the problem is that many couples haven’t looked ahead. In a recent Fidelity study, 46 percent of baby boomers said they had “no idea” how much they needed to have saved for retirement. Couples should use a retirement calculator, such as this free one from T. Rowe Price, to estimate how long their current savings would last under different circumstances. You can vary the input to get results based on retiring together or at different times.

“It’s about having a conversation and running the numbers to see what it means for one person to retire and what it means for two people to retire,” says Stuart Ritter, a senior financial planner with T. Rowe Price.

It can make a big difference in your savings if even one of you chooses to work a little longer. A 2018 study found that delaying retirement for just three to six months could impact your standard of living in retirement as much as saving an additional 1 percent of income over a 30-year career.

“Unless couples are the same age, and in the same health, it usually makes more sense for one person to retire earlier. There can be both financial and relationship benefits,” says Morris Armstrong, registered investment advisor, Armstrong Financial Strategies, Cheshire, Connecticut. One advantage is that a spouse who puts in extra years on the job will shorten his or her retirement period by that amount, preserving those assets and allowing for larger eventual withdrawals.

Retirement’s Emotional Impact

If both members of a couple quit working at the same time, it can cause complex emotional reverberations in the relationship. Not only have you lost your sense of identity from a lifetime of work, but you suddenly are together with your partner 24/7. Some couples handle this transition with aplomb and others chaff under this new arrangement.

If both spouses retire together, they can all too easily begin to take small frustrations out on each other. Boundaries that were previously clear can become muddled, and a happy union can show wear around the edges.

Retiring separately can allow one spouse at a time to adjust to this new reality. Perhaps he or she will delve into some volunteer work, or take up a new hobby. At any rate, that spouse can begin to process what it means to be in this new reality. Your relationship dynamic will change, and it can be beneficial to ease into a new system of living together.

The Social Security Conundrum

Another number to examine with care ahead of retirement, especially for any spouse who makes significantly lesswives, is social security benefits. (Stay-at-home mom/dads and anyone who , men who married someone significantly older women and those whose wife is the big wage earner should also take note). Generally, the younger you are when you start taking Social Security, the less you’ll receive. Spouses who retire at the same time as their older partner may lose peak earning years, which is especially true if the younger partner opted out of the workforce to care for children or an aging parent.

Your Social Security benefit is based on your 35 highest-earning years; if you have less than that, those years will get filled in with zeros. For that reason, women usually benefit more by staying on the job, according to a recent study. Additionally, if you continue to work until age 70 instead of retiring at 62, Social Security rewards you with a “bonus” for those additional years. If you retire before full retirement age (which varies according to your birth date), benefits are reduced a fraction of a percent for each month before that date. If you retire after, you may be eligible for retirement credits that increase your benefit up to age 70. See the Social Security benefits chart for pros and cons that may apply to your situation.

“A retirement delay of five years is a hugely positive move for couples who are just on the edge of having enough money saved, for those who have a family history of longevity or for those who simply need to work five additional years to get to ‘enough,’” says Jane Nowak, CFP®, financial advisor with Wealth and Pension Services Group, in Smyrna, Georgia.

The additional income generated by one spouse continuing to work may allow both members to delay taking Social Security, thereby increasing both benefits.

Health Insurance

If one or both of you is opting out of a career before you reach the Medicare-eligible age of 65, you’ll probably have to find a source for health insurance. Less than a fifth of big employers offer retiree health coverage, according to the Society for Human Resource Management. So it may make financial sense for one of you to stay at a job that provides health insurance to cover you both.

The Affordable Care Act (ACA) has made it easier to obtain health insurance, especially for anyone with a pre-existing condition. However, these plans may be pricier and/or carry a higher deductible than what was available at your workplace.

If you thought you could just continue corporate health coverage by using a COBRA plan, you may be in for a surprise. While you may be covered for up to 18 months, you’ll owe the entire premium amount. That was about $7,000 per year in 2018, according to the Kaiser Family Foundation.

There is a further caveat to COBRA coverage that many don’t know about. When someone begins Medicare Part B, there is a window during which that person may enroll in a Medicare Supplement without any evidence of insurability. That window is vitally important, especially for someone with health conditions. However, anyone continuing on their employer’s health plan via COBRA loses that privilege because COBRA is not a qualifying event. There is no guaranteed insurability for someone who enrolls in Part B after COBRA stops and attempts to purchase a Medicare Supplement.

Do You Both Want to Quit?

It could be that after years of planning on retiring together, one of you is simply not ready to quit. Some people choose to stay on the job “simply because they don’t want to stop working, and that is fine,” says Armstrong. “I have also seen people who simply cannot wait to leave.”

Nearly six in 10 working Americans want to keep working past traditional retirement age, according to a 2017 Gallup poll. That can mean working part time, or taking on a less-stressful position. The most important thing is to have ongoing conversations with your spouse, and know where you stand financially before you call it quits.