Should You and Your Spouse Retire at the Same Time?
You and your spouse may be dreaming of the day when you can both leave your careers behind and spend your time as you please. Perhaps you’ll spend more time with family. Maybe you will travel. Or you may just relax and enjoy each other’s company. Retirement is a time for both of you to enjoy your years of hard work on the job and in raising a family.
However, just because both of you want to retire doesn’t necessarily mean you should do it at the same time. You may want to consider having one person retire while the other works for several more years. Below are a few reasons you and your spouse may not want to retire together:
No matter how much you prepare, retirement always requires a big financial adjustment. Going from two incomes to zero incomes is a major transition that often requires a change in goals and spending habits.
By staggering your retirements, you can create a transition period to ease into your new lifestyle. For example, after the first spouse retires, the other can continue to work for several more years. That gives you the opportunity to scale back your budget gradually and adjust to a reduced income.
Also, if one of you is still working, that gives you a few more years of saving for retirement, which could give you greater income stability when both of you are retired. Review your budget carefully and see how it would be impacted if one of you continued to work.
Health Care Costs
Health care is likely to be one of your largest out-of-pocket expenses in retirement. According to a study from Fidelity, the average 65-year-old couple retiring today is expected to spend $245,000 out of pocket on health care in retirement.1 That figure includes expenses like premiums, deductibles, copays and more.
However, if one of you continues to work for a few extra years, you may be able to mitigate some of those costs. First, you can stay on the employer’s health care plan, which could help you avoid Medicare premiums and copays.
Second, you could continue contributing to your health care savings account, or HSA. You can take your HSA balance with you in retirement and use it to pay for health care costs in a tax-advantaged manner.
The period right after retirement is often a major transition in more ways than one. Obviously, there is a transition period from a financial standpoint, but you and your spouse could also face challenging emotional transitions. It’s not uncommon for some retirees to feel anxious or even slightly depressed immediately after retiring.
You’ve probably spent much of your adult life at work. Waking up every day without a job to attend can be a big shock. How will you spend your free time? What will you do to keep busy? More important, how will you and your spouse adjust to being home together all day?
If you stagger your retirements, you can give each other space to figure out how best to handle retirement. The spouse who retires first can adjust while the other continues to work. Then, when the second spouse retires, the first spouse can support them through the adjustment period.
Not sure how you should time your retirements? We welcome an opportunity to help you reach your retirement income goals and determine the best schedule for you and your spouse.
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15816 – 2016/6/17
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