Back when people from my parents’ generation were first planning their lives together, most married couples looked forward to working hard for a few decades, buying a house, raising a family and then retiring together while they still had enough money and energy to travel and pursue favorite hobbies.
Some couples do manage to pull this off and thrive. But for many others, any of a host of obstacles can block their ability to retire at the same time. For example:
• Thanks to periods of unemployment, home-value decline or 401(k)-account loss suffered during the Great Recession, many couples simply don’t have enough money to retire together comfortably.
• If there’s a significant age difference, one spouse may not have accumulated enough Social Security credits to qualify for a benefit by the time the other is ready to retire.
• Women often worry that the couple hasn’t saved enough since they’re statistically likely to survive their spouses — often for a decade or more.
• One spouse must continue working to supply employer-provided medical coverage until both reach Medicare-eligibility age (65 in most cases).
• One spouse is just hitting his or her stride career-wise and isn’t ready to slow down.
Among couples who have managed to save enough to retire together, when it comes time to pull the trigger many realize they haven’t fully agreed on where or how to retire or they discover that their wishes have diverged over the years. This can put tremendous strain on a marriage for those not willing to compromise and talk things through.
Long before retiring, couples should ask themselves:
• Should we downsize to a smaller dwelling or even move to a retirement community?
• Sell the house, buy a trailer and live like nomads for a few years?
• Move to a warmer climate or to be nearer our grandchildren?
• Move to a state with lower taxes or cost of living?
• Start a small side business to keep money rolling in?
• Are we finished supporting our children financially?
Even before asking those tough questions, couples already should have begun estimating retirement-income needs. Social Security has an online retirement estimator that can help (www.ssa.gov/estimator). After exploring various retirement scenarios, they should consider hiring a financial planner to help work out an investment and savings game plan, or to at least review the ones they’ve devised.
Along with the financial impact retirement will have on a marriage, couples need to keep in mind that this may be the first time that they’ve been together, day in and day out. Many people are so consumed by their jobs that they haven’t taken time to develop outside interests and hobbies. Well before retirement, spouses should start exploring activities and networks of friends they can enjoy both together and independently. They should consider things like volunteer work, hobbies, athletic activities or even part-time employment if they miss the workplace interaction and need the money.
And finally, if the plan is to have one spouse continue working for a while, spouses should try living on only that one salary for a few months before retiring as an experiment. This will give them an inkling of how well they’ll do financially and whether they might both need to keep working to amass more savings.
Jason Alderman directs Visa’s financial education programs.