Since the 1970s, an increasing number of households have gone from one income to two. There are now more couples than ever before who are both working and pursuing individual careers while partnering to fulfill the financial needs of the household.
What happens when one partner in a relationship is ready to retire but the other isn't? It's not uncommon for couples to want different timelines for retirement due to age, changes in priorities, or other causes. A study conducted by Fidelity discovered that 43% of people disagree with their partner about the timeline for retiring. In fact, the younger the couple was, the more likely they were to have different ideas about retirement.
And just to be clear, the disagreements don't always center around money. If one partner retires while the other partner continues working, there are major social and relational obstacles that need to be discussed so that couples can avoid the type of conflict that could create an unpleasant living situation.
Retirement and Money
However, there are some money-related conversations that need to take place as well. It's crucial for the duo to correctly assess the level of household income when the first partner retires and be confident that their desired lifestyle can continue. Also, couples should give when to claim Social Security benefits thoughtful consideration. Usually, the higher earner will get a bigger benefit, but it's important to compare the other half's spousal benefit against what they could receive based on their own work history. Again, if one partner plans to leave the workforce and claim social security benefits earlier than their full retirement age, they need to calculate the lower household income that will result.
Health and Benefits
Another issue to be aware of is medical insurance. In plenty of scenarios, the partner earning more income will cover both spouses with a workplace-sponsored plan. But if the higher wage earner retires and enrolls in Medicare before the still-working spouse is eligible, how will they manage the working spouse’s medical coverage? Be sure to also consider the increase in any out-of-pocket medical costs and how that relates to the overall household budget. If you missed our Social Security and Medicare webinar, you can watch it here.
If you're hoping to maintain a healthy marriage, it's key that both of you voice your expectations early on. This includes discussing things like how you'll divvy up household chores, what each person's hobbies are outside of work, and how much personal time vs. work time each person is expecting. Especially if the working spouse is operating out of a home office, as has become even more common during and after the pandemic, it can be vital to establish recognition of not only working hours but also working space so that the retired spouse doesn’t intrude on the working spouse’s career pursuits. If the retiring spouse is expecting the other partner to be able to drop everything at a moment’s notice and travel, this can create major friction without lots of clear communication well beforehand.
Triada Advisors will help you whether you plan to retire together or at different times. We want to create smooth transitions and well-funded retirement lifestyles for all our thriving retirees. Click here to read our blog, “Retirement Realities.”