Retiring together might be the ultimate dream of most couples. Traveling together, sitting by the porch and enjoying coffee on a weekday, and visiting friends and relatives often. What could be better than these?
But the reality is that in most cases, one retires sooner than their spouse. Age and career differences, as well as health issues, are among the reasons why.
The emotional, financial and psychological adjustments
When a person retires sooner than his or her spouse, there are most likely emotional and psychological adjustments that a couple has to make.
Couples who have lived their lives mostly apart may face certain challenges the moment they start living each day with none but each other, such as having to deal with different lifestyle patterns and schedules.
Additionally, they may also struggle with adjusting to a homebound life.
From a financial perspective, it can either be a good or bad thing. For instance, it can be greatly beneficial for one to continue working to be able to still save money. It could entail more Social Security entitlement and extra income after retirement too.
Sometimes when the retiring spouse doesn’t have enough savings, it could mean ‘disaster’ to the other as they would have to work harder to support their daily needs, not to mention the medical bills.
Key considerations to make while preparing for retirement
If you are retiring ahead of your spouse, it is important that you, as a couple, talk about your plans together. There are many things to consider, such as your current financial status, your financial goals as a couple, and whether you have enough savings to face the coming years without a source of income.
You should be able to discuss matters openly, settle disagreements, and create a good financial plan.
Take note that it really is a big deal when one stops getting a paycheck. You both need to adjust to the reduced cash flow.
1. Understand that you still need a budget
Lucky you are if you are no longer paying the mortgage, sending a child to school, or paying a debt.
If your spouse will be left with no financial obligation other than your day to day expenses, it would be much easier for the both of you. But even so, understand that you still need to save money.
Consider calculating how much your retirement savings account has grown over the past years and determine whether you will have enough funds to support your financial needs.
Don’t forget about your health requirements too. You could need more medical attention in the next few years so this has to be included as well.
2. Consider future expenses and taxes
Just because you retire doesn’t mean your expenses stop.
During financial struggles, you can greatly benefit from cash advance online, traditional loans, from low-interest loans.
But of course, sooner or later you have to make repayments. You may also think about making an important purchase, initiating a home improvement, or investing in a business. These are all going to cost you money too.
Furthermore, take note that even if you’re already retired, you still would have to pay your tax dues. Some investment accounts, like the Roth IRA, don’t tax your withdrawals. But other traditional investment accounts, like the 401(k) are simply tax-deferred. Meaning, your withdrawals are taxed.
3. File for Social Security retirement benefits
Apart from your own retirement savings plan, you should also consider the retirement benefits offered by the government. Apply online for your Social Security retirement benefits, it only takes 15 minutes!
There’s no need to wait for an appointment with the Social Security office. But in order to qualify, you should be at least 61 years and 9 months old.
If you’re 65 years old, your retirement benefits would include Medicaid. Once your application has been processed, you could receive your benefits after four months.
4. Figure out your health insurance
Perhaps one of your biggest worries, when you retire, is how you are going to deal with your medical bills.
Healthcare is one of the major expenses of retirees.
You definitely wouldn’t want to put all the financial burden on your spouse. By this time, you should already have a health insurance in place. If you’re retiring before the age of 65 and you lose your job-based health plan, you can use the Insurance Marketplace to purchase a plan.
If you have retiree health benefits, you will be covered by the health care law. You also have the option to choose between Medicare and the Marketplace benefit programs.
You can learn more about your health insurance benefits here.
Planning for retirement is something that every couple should do together. Even if one is retiring sooner than the other, both of you have to be on the same page as to your goals, especially when it comes to your finances.
Hopefully, these tips should help the process easier.