3 Tips for Successfully Retiring Together
Retirement is changing – but is your thinking about it still stuck in the last century?
Looking at the active, vibrant and well-educated Boomer clients that I am honored to work with, I often wonder: do we need to re-define retirement?
After all, just a decade or two ago retirement meant sitting by a fireplace in the rocking chair and whiling the days away playing Bingo at a local senior center. My clients today seem to have a different set of ideas as they envision a future of travel, exciting new projects and, for some, even no retirement at all! Those new developments create a need for a very different set of conversations that go beyond “what would be your ideal retirement age?” and “what is your monthly budget in retirement?”
Here is a taste of what you should consider if retirement (whether together or as a couple) is on your horizon.
We are all living longer
Today’s life expectancy for an average American stands at just over 79 years old. Two decades ago, most financial planners would simply take the average retirement age (65 years old), subtract it from the life expectancy and recommend that the client plan for a 14-year retirement stretch.
That logic no longer works. For one, the average life expectancy is not a useful estimate for the Boomer generation because it includes infant mortality. A “look-forward” life expectancy may provide information that is more useful. In that vein, according to the Social Security Administration, someone aged 65 today can expect to live until 84.3 years old for a man (the comparable estimate is 86.6 years old for a woman).
However, even those higher projected averages may not be high enough. Individuals with higher income, as well as those who live in well-developed and wealthier geographic areas,
can have longer life expectancies than the nationwide average. Add the ever-growing list of improvements in technology, medicine and nutrition (from the cancer-fighting promise of Ketogenic diet to genetic therapy), and life spans of 100-120 begin to look reasonable!
Then there is the research of non-genetic longevity influencers, such as one’s connection to community, exercise, nutrition choices and more that have been made popular by the National Geographic’s Blue Zones Project and continue to build a following. In other words, old statistics about life expectancy do not apply in this new world.
What does this mean for your retirement strategy?
Retirement questions need to be approached with a whole new set of assumptions. Most of us imagine life in retirement as two partners, side by side, gardening or walking on the beach. This implies that spouses of similar age retire together. While that approach may work for some, it comes with a delicate balance of advantages and disadvantages.
The pros of a perfect case scenario are easy to list: the two new retirees get to share precious leisure time and re-connect in a way that may have been difficult when they had to balance raising a family and building careers. However, real life isn’t all about sailing off into the sunset. It is critically important to consider the possible downsides of the decision to retire at the same time, especially because it is not one that’s easily reversed.
The most obvious downside is the loss of both active incomes at the same time. Even the best-prepared couples that have saved diligently during their working years may experience a financial shock as the predictable flow of paychecks stops and the retirement savings account balances begin to drop. Couple who want to soften the transition may choose to stagger their retirements, a decision that has the potential to stretch their savings in several significant ways.
If one of the spouses is younger, in good health and enjoying his or her career, a choice to work a little longer can mean a few extra years of saving a portion of the paycheck, an ability to delay drawing Social Security benefits (which can increase the benefit amount) and access to healthcare coverage through the employer-paid benefits. Combined, those factors can translate into paying for a longer retirement, or for a same-length retirement with a better lifestyle.
Then there is the option of no planned retirement at all. This may sound like a last-ditch option for those who have not saved for retirement, but in reality more and more high-earners are opting to work well into their older years. Some may feel that they have not saved enough to fund their lifestyle in retirement, while others connect their identity with their role at work and cannot imagine a life without it.
Which brings me to the next point. Whether you are hoping for a retirement together, a staggered retirement or no retirement at all, many couples are unprepared for the next stage in their life in a way that has very little to do with money.
The trouble with lack of clear communication
There are hundreds of books and dozens of TV shows that emphasize the importance of couples communicating with each other. And yet, numbers show that we could all do better. A recent study by Fidelity reports that as many as 1 in 3 couples disagree about their retirement lifestyle, and half aren’t in agreement about optimal retirement age.
What can you do to avoid the rude awakening and make sure you and your spouse are on the same page? Here are some ideas.
- Make sure your vision for retirement matches your spouse’s. The best to accomplish that is to write out the way you imagine life in retirement independently first, then compare notes. Remember that few couples have a perfectly matched set of visions for retirement, and that it is normal to have some gaps. The goal of the exercise is not to create matching worksheets, but rather to foster a conversation and craft a solution that is comfortable for both of you.
- Talk about your expectations of each other. If spouses decide on staggered retirement, their individual ideas about the best way to re-distribute house chores, manage working hours and plan travel should all be laid out in the open. If a recently-retired Husband expects that Wife will come home early every day and take Fridays off, and Wife is enjoying her pace in a corporate workplace and does not want to slow down yet, the couple has the basic building blocks for a conflict. Misunderstandings could happen in the other direction as well, with a working Wife expecting that Husband will take care of grocery shopping and house cleaning, and the Husband’s idea of life in retirement is playing golf and building guitars in the garage (not unloading the dishwasher). Those examples may sound silly, but they highlight the importance of talking about what will change for the two of you as you approach retirement.
- Finally, resist the pressure to plan for days spent attached at the hip. Work creates a natural rhythm where spouses are together and apart some of the time, and this combination of independence and togetherness can help you avoid getting on each other’s nerves in retirement.
Couples planning for retirement: what you need to know
In addition to using the most up-to-date longevity projections, I encourage my clients to be flexible when thinking about retirement. Annuity product brochures at a local insurance company may have convinced you that retiring at the same time is “the way”, but in reality you have many options to build the timeline and the lifestyle that suits you as a couple.
From staggered retirements to no retirement at all, be sure to talk to your spouse about your ideas. It is perfectly normal to have difference of opinion and preference – what is not OK is being surprised by the gap in your thinking after one or both of you have stepped out of the workforce. Finally, be sure to re-assess your situation periodically and to work with a trusted financial planner. As your health and financial situation shifts, your concept of optimal retirement should shift with it.