6 Retirement Planning Tips for Couples with an Age Gap

6 Retirement Planning Tips for Couples with an Age Gap

Love is timeless – but humans are less so. That’s why it’s crucial to address your concerns about retirement early if you’re in a relationship with an age gap. Do you want to retire at the same time as your spouse but have uncertainties about your finances? Are you unsure how to proceed with retirement if one spouse works longer?

Answering these questions boils down to acknowledging that couples with large age gaps have different needs and addressing them. Here are 6 challenges that mixed-age couples seeking retirement planning, may face – and how to navigate them. 

Problem #1: Mixed-Age Couples Have Different Retirement Ages

For many couples, enjoying retirement together is a lifelong dream. But retirement gets more complicated when you throw a significant age gap into the mix. 

For example, if the older spouse retires on time, you’ll have to consider what that will mean for the younger spouse. Will they continue to work? Scale back to part-time? Switch to a work-from-home job to spend more time with their spouse?

In these arrangements, it’s not uncommon for the younger spouse to feel tempted to retire earlier than planned. But if you’re unprepared financially, your portfolio may crumble under the weight of one “regular” and one “early” retirement. 

Solution: Plan Ahead (and Don’t Set Your Heart on Retiring Together)

Fortunately, you can bypass many of these concerns by planning ahead. Sit down with your spouse and share your retirement wants and needs, including your timeline. Weigh the pros and cons of either spouse retiring early or working longer than planned. 

Then, take a hard look at your careers and retirement plans to see if you can make it happen. You can also reach out to  TAKWEALTH virtually or in person to help you plan ahead. 

Problem #2: Unexceptional Investments Don’t Cut It

One of the biggest mistakes you can make as a mixed-age couple is taking a canned investment approach. Your investments should be exceptional, like you. 

Of course, not everyone is suited to make the same investments as their partner. But if you and your spouse have a big age gap, you’re particularly ill-advised to follow the “traditional” rules of thumb. From health problems to one partner passing significantly earlier to differences in earned income, mixed-age couples deserve specialized consideration. 

Solution: Customize Your Retirement Plans

A way to accommodate both partners’ risk tolerance, time horizon, and income needs is to customize your retirement plans. 

As such, it’s often advisable for mixed-age couples to invest a higher percentage of their portfolio in stocks. You may also need to scale back your withdrawals to last for a longer “combined” retirement and capture more growth. 

That said, each partner may also benefit from establishing individual savings to provide short-term liquidity. Just remember everyone is unique, so you will really want to make sure your advisor understands your specific needs. 

Problem #3: Your Social Security Benefits Adjust to Your Retirement Age

Even if you don’t need the payouts, taking Social Security can help you protect your retirement savings. But your age of retirement can affect how much you qualify for even if you don’t take your withdrawals immediately. 

Consider first that if you work for less than 35 years, you’ll reduce your benefits due to how Social Security is calculated. By contrast, if you wait until age 70 to take your withdrawals, your benefit may grow up to 8% per year. But if you take your benefits as soon as possible, you’ll receive substantially less than if you waited. 

Solution: Delay Your Benefits

Social Security provides a safety net in case your portfolio dries up or you want to preserve your retirement fund. To get the most out of your benefits, working longer and delaying your withdrawals can increase your paycheck. Additionally, these moves can increase your survivor benefits, providing more financial security for the longer-lived spouse. 

Problem #4: Healthcare is Expensive 

Healthcare often comprises one of your largest retirement expenses. Insurance premiums, copays, and deductibles add up quickly – and whittle your savings down in a hurry. 

If the retiring partner is too young for Medicare, or if both spouses received insurance through the retiring spouse’s employer, your healthcare costs may rise dramatically. Moreover, if the younger partner has their heart set on early retirement, your health expenses may compound. 

Solution: Plan Around Your Eligibility 

A way to help ensure your healthcare expenses do not become overwhelming is to plan around your future eligibility. Don’t just assume both partners will work until they qualify for Medicare – talk about it.

Once you have an idea of what each spouse wants, you can work around your needs. For instance, if:

  • The younger spouse continues to work, the older spouse may qualify for their health plan supplementary to Medicare
  • Both partners retire together, you’ll need to budget for healthcare costs ahead of time
  • One or both partners retire early, someone may need to pick up part-time employment with health insurance benefits

Problem #5: Long-Term Care Can Drain Your Savings 

Another financial hazard to consider is the prospect that either spouse may require long-term care. Long-term care expenses can drain your savings faster than you can blink, whether at home or in a facility. And if the bulk of your savings funds one person’s care, the surviving spouse may not have enough left over. 

Solution: Invest in Long-Term Care Insurance

Aside from saving more, a way to address long-term needs is with long-term care insurance. These plans cover at-home, assisted living, and nursing home care as you age. 

Typically, long-term care insurance makes the most sense for individuals with too many assets to qualify for Medicaid but who could still see their savings decimated by long-term expenses. Bear in mind that insurance premiums increase the longer you wait to sign up. To get the most affordable deal, start looking when the older spouse is between 55-65. 

Problem #6: You Don’t Know Where to Turn

Planning for retirement is a multi-faceted endeavor that lasts your entire life. Even once you retire, you’ll need to adjust your plan to help ensure your money outlives you. And if you’re in a mixed-age relationship, you have your partner to consider, too. 

Unfortunately, the complexities of retirement (let alone retirement for mixed-age couples) make it exhausting to plan comprehensively. 

Solution: Connect with a TAKWEALTH Financial Advisor

TAKWEALTH is a brick and mortar CFP located in Torrance, CA. We are passionate about retirement preparation and look forward to connecting with you at our office or virtually. Regardless of your age and relationship status, you deserve to feel confident in your retirement strategy. 

TAKWEALTH offers a full range of retirement planning services, from estate planning strategies to investment services. Whether you have no idea where to begin or questions about where you’re stuck, we’ve got your back – and we’ll help you prepare for the future. Contact us to learn more. 


More About the Author: Randy Takaki

Prior to founding TAKWEALTH, Randy Takaki graduated from the University of California, San Diego with a B.S. in Artificial Intelligence. He then spent over a decade as a senior advisor and AI contributor in the data-driven world of asset management. Randy’s main goal for TAKWEALTH clients is to build trust by creating a foundation that reliably and uniquely manages a client’s assets to meet their life goals. When Randy is not working hard for clients at TAKWEALTH, you can find him exploring the outdoors or planning his next computer science project.