4/8/2011 12:57 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.
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I was able to retire completely at age 62 having already retired from the United States Navy. My wife, Linda, however, worries that she will never be able to retire. She has about 6 more years before she will be eligible.
She is my life companion and I am so blessed.
I am not one to travel or make my retirement one big vacation. I love to write. Both Linda and I love working in our local church. We both love gardening as well.
My life is not all about me. I want to mentor young ones in finding a fulfilling life like I have found. I would like to teach "success in life" and "public speaking" classes. Unfortunately this world does not easily open channels to do such. So, maybe I will pass this passion on partly by writing books.
I would love to do pulpit supply and interim pastor work, but those who could make such an avenue possible seem to guard these pulpits even to the cost of losing them.
Here's some money and financial issues that I haven't found the answer to.
First, how much does my spouse's income affect my retirement pay? For instance, should I compute our Income Tax filing Jointly or Separately?
Will my Social Security be taxed because she has an income that is computed with mine because we file Jointly?
Secondly, I have cashed/rolled over some of my 401(K)'s to finally get the floors redone in the house and to give me a "Tool Shed" steel building to spend a lot of my retired time piddling in. How do these withdrawals affect my Social Security?
If I am called by a church to be an interim pastor, I would like to do so with no pay. I have my retirement income and have already given myself to volunteer jobs in my church, both teaching, repairman work, and some administration. I would do it as a labor of love.
However, I realize that such an arrangement by the church will make me "less accountable' in the fact that if I am not paid, there could be a feeling that my "contract" is not binding.
So, what can I allow the church to pay me that would not affect my Social Security status?
Does my military retirement pay affect my Social Security?
Yeah, I know. I need to go into town to the Social Security Office, take a number, and wait half the day to get a possible good answer, depending on the hired public servant who "draws my number".
Anyway, these questions may be fodder for inclusion in a Money article. Maybe others wonder the same things though maybe not with church work, but with other organizations they are involved in as they retire.
Excellent article. I’d also add that it’s important to know what you’re retiring to, not just from. And for those who don’t know how they’ll ever retire, it’s important to never assume you have to stay on the same track you’re on. In my experience, most people want to change their life in some way. Perhaps many would be better off simplifying their lives a bit, investing in themselves and changing careers – perhaps even moving into something they would enjoy into their “normal” retirement years… and then phasing into retirement later on. In the meantime it’s important to make the most of the money you do have by shooting for a retirement nest-egg of say 12-15 times annual salary and also learning about putting together a globally diversified portfolio of primarily index funds. If you think you need help, a fee-only advisor can be found by visiting The National Association of Personal Financial Advisors online.
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