4/8/2011 5:00 PM ET|
When only one of you can retire
Couples face complicated decisions when one is ready to stop working while the other can't.
Jim and JoAnn always had assumed they'd retire about the same time. They bought a motor home and planned to take some long trips together.
But they hadn't counted on the lousy economy.
Jim quit work last year at 62 with two pensions and Social Security to replace his income. But business at JoAnn's clothing shop is down considerably. She doesn't think she could sell it as she'd planned, and now she feels stuck.
"It has been disheartening to see the thriving business I worked so hard for lose its value," said JoAnn, '60. "I would love to be retired with him and do feel a little jealous sometimes."
Rose has the opposite problem: She's retired involuntarily at 55 while her husband still works at 66. He can't quit because she needs the health insurance his job provides.
"He would like to retire but ... unless and until I can get a job with decent pay and benefits, he can't," Rose wrote to me. (Rose and JoAnn didn't want their last names used.)
Rose hadn't planned to be in this position. She always assumed that she'd work well into her 60s and that he'd be the one with time on his hands, but she can't find work.
Another woman who wrote has a spouse who is 15 years older, and they're fighting about when to retire. The spouse is ready to quit now, but she worries that they haven't set aside enough money and that she'll end her days in poverty.
A complicated dance
When my parents approached retirement, most of the talk was about how the stay-at-home wives would deal with suddenly having their men "underfoot." One husband, an engineer, decided his first project would be rearranging the kitchen so it would be more efficient. Divorce nearly ensued.
Today both halves of a couple are more likely to be employed, and few have jobs with the kind of retiree medical benefits that could cover a younger spouse before Medicare kicks in at 65. That creates a far more complicated dance when it comes to deciding who retires and when.
Some couples are almost destined to face these issues because of age differences. Although most couples' ages are within three years of each other -- in fact, 32% of married couples were born less than a year apart, according to a 2008 census study -- 31% are four to nine years apart in age, while 9% have a 10-year or greater age difference.
The greater the gap, the longer the older spouse may spend in retirement alone -- or, conversely, working at a job that he or she would rather leave behind. Either way, both spouses may be acutely aware that time they could spend together traveling, enjoying the grandkids or pursuing nonwork interests is steadily passing away.
Strategies for coping
How do you cope if you're facing a life with one partner retired and the other not? Here are some strategies to consider.
Get some professional help. There are too many crucial, critical decisions to be made in the years just before retirement -- and so many ways to screw it up. Withdraw too much from your savings or tap your accounts in the wrong order or opt for the wrong payout method for your pension, and you could suffer the consequences for the rest of your lives.
That's why I think everyone should try to meet with a fee-only financial planner before the first spouse is scheduled to retire -- and preferably five to 10 years before that event, to give yourselves time to make course corrections. Consulting a financial planner is essential if you're not retiring simultaneously, since that complicates the numbers further.
Understand how Social Security benefits work. If you both have worked, you each have two options for taking Social Security: drawing on your own benefits or taking spousal benefits, which typically give you a check equal to 50% of your spouse's benefit (although your spousal benefit is reduced if you opt to start taking checks before your own full retirement age). You can even do both: start by applying for spousal benefits, then switch to your own benefits later, after they've had time to grow some more.
Again, this is something all couples need to negotiate, but having one spouse still working can add complications. You can start getting some idea of what to expect by using Social Security's benefit calculator. But again, you'd be smart to talk to a financial planner who's familiar with these calculations.
Consider your alternatives. If one of you is working simply to provide health insurance for the other, you may have other options -- or you may not. Trying to get an individual health insurance policy is tough when you're older, particularly if you have pre-existing health conditions, which many people in their 50s and 60s do.
Health insurers will be required to cover everyone, regardless of pre-existing conditions, starting in 2014, but we have no idea yet how affordable those policies will be. In the meantime, you can work with an experienced insurance agent to see what's possible in your state. You may be able to find an affordable policy if you're in excellent health and willing to stay within a health maintenance organization or accept a high deductible. If the reason one of you is still working isn't health insurance but lack of savings, perhaps the retired person can look for a part-time job to pitch in. That could shorten the time the working person has to stay on the job while filling up some of those hours that can weigh heavily on the lone retiree.
Manage your expectations. Conflicts are almost inevitable when one person is making the surprisingly hard transition into post-work life while the other is still dealing with commutes and office politics. Compassion, communication and compromise can help enormously.
Those compromises could include a retirement different than what you originally planned. As noted above, the retiree could go back to work part time, or the still-working spouse could phase into part-time work earlier than he or she might otherwise prefer, if that's a financially sound option. You may decide you'll spend less than you originally planned so you can get the second spouse retired, or semiretired, while the first is still in good enough health to enjoy retirement.
New roles, new expectations
Financial planner Ross Levin of Edina, Minn. said his clients who have negotiated this one-retired, one-not dilemma the most successfully are the ones who have pursued their own interests while still making time for each other. A retired spouse who has a passion for photography that his wife doesn't share could, for example, schedule photo trips on his own or with a like-minded group of enthusiasts. Then her vacation time can be spent doing things with him that they enjoy doing together.
Renegotiating household chores is another good idea, since the still-working spouse is likely to resent a retired spouse who doesn't take over more of the housework. That willingness to pitch in might not just relieve stress -- it can help the working spouse pursue his or her dreams even before retirement.
One reader reported that her husband, who is 21 years older, has been retired for three years and has taken over most child care duties.
"It is great," she reported on my Facebook fan page. "He is 'Mr. Mom,' which has enabled me to go back to school at night to finish my degree."
Liz Weston is the Web's most-read personal-finance writer. She is the author of several books, most recently "The 10 Commandments of Money: Survive and Thrive in the New Economy" (find it on Bing). Weston's award-winning columns appear every Monday and Thursday, exclusively on MSN Money. Join the conversation and send in your financial questions on Liz Weston's Facebook fan page.
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