Conversations to Have with Your Spouse Before You Retire

Engaging in insightful conversations with your partner about how you envision your retired life can bring a renewed sense of excitement and purpose.

While it’s fair to assume you’ll likely encounter a few bumps along the road toward mutual alignment, remaining honest about your expectations and finding common ground is paramount to successfully navigating retirement with your spouse.

To jump-start the dialogue, we’ve compiled a list of key topics and how to address them with your significant other.

Developing a vision for retirement

Considering where you and your spouse want to live during retirement is a good start. U.S. News & World Report publishes an annual “Best Places to Retire” study based on various factors including taxes, affordable housing, happiness ratings, and desirability. This website is often the perfect place to begin if you’re unsure about where to spend your golden years.

If you both want to reside in a brand-new locale, consider renting before buying as a practical experiment. This is especially important if this area is located far away from friends and family and/or you haven’t previously lived there. As a worst-case scenario, if you both find yourselves unhappy in this new location, you’ll likely enjoy the ability to pivot more quickly and with less hassle—as you won’t need to sell a home.

After deciding where to live, spend time figuring out how exactly you’ll enjoy your newfound freedom. Many retirees often share that retirement, in itself, is sometimes dull. Exploring new hobbies helps in this regard. Have you always wanted to paint? Learn to play golf? Take guitar lessons? Beyond these popular pastimes, volunteering is also a great way to get out of the house and into the world during retirement—and it can profoundly impact your happiness. Regardless of your decision, the goal here is to find new, exciting activities to fill your time while putting your mind and body to work. You want to pinpoint pursuits that inspire and give you a new sense of purpose.

When to retire

Now that you have a shared retirement vision, you’ll need to determine if and when—from a financial perspective—you can implement the same. This exercise will help set realistic expectations for each of you; for some, it may help you rethink your ideal retirement scenario. Let’s discuss a few important factors as part of this process:

Your home
Housing is the most significant expense for the average retiree household and includes costs related to your mortgage, rent, property taxes, insurance, maintenance, and repairs. More specifically, the average retiree household spends an average of $18,872 per year ($1,573 per month) on housing expenses: representing almost 36% of their annual expenditures. Paying off your mortgage and building equity (or even downsizing) before fully retiring is an excellent first step and often one of the smartest things you can do. Moreover, keeping your living expenses in check will allow you to more fully enjoy life after you stop working.

Social Security
Social Security benefits shine through as another crucial topic. The age at which you decide to collect Social Security will determine your monthly benefit amount. Choosing to receive benefits before you reach full retirement age (when you’re entitled to 100% of your benefits) means your monthly benefit will get hit with a permanent reduction. More specifically, Social Security benefits increase by approximately 7% each year between age 62 and your full retirement age (and then rise about 8% each year between your full retirement age and age 70). As a result, you’ll need to determine if your future lifestyle can accommodate a delay in collecting Social Security benefits for one, if not both of you.

Health insurance
A third consideration is health insurance. People are generally unable to collect Medicare until the age of 65. Therefore, you’ll need to bridge that gap if you retire before becoming eligible for Medicare and lack coverage through another group plan. However, remember that coverage won’t come cheap: especially if you fail to qualify for premium tax credits on Affordable Care Act insurance exchanges.

If you don’t retire too early, COBRA coverage is one specific option that gives workers and families who lose health benefits the right to choose continued group benefits. However, coverage is only temporary as Cobra is limited in length—typically up to 18 months.

Other alternatives include:

·      Health-sharing plans (which are limited)

·      Part-time work that offers benefits

·      A health savings account (HSA) that helps cover high co-pays and out-of-pocket health care costs.

Retiring at different times
One overlooked yet common scenario occurs when one spouse retires before the other. Basic activities such as rising at the same time versus one spouse always sleeping in, assigning household chores, and not feeling trapped at home while your spouse works are often significant considerations with respect to maintaining a healthy marriage. A conversation can help relieve any potential tension before it arises.

The financial impact of losing a spouse

One of the least pleasant—but crucial—conversations to have involves planning the aftermath if one spouse is left behind following the other’s death. There are several points to address during this chat including life insurance, pensions, and all other sources of income: including Social Security. For example, if you’re both collecting Social Security benefits, how will losing one check impact your finances?

If one spouse dies before the other, the surviving spouse can take what’s known as a “Social Security survivor benefit.” This allows the surviving spouse to collect his or her check or the check of the deceased—whichever is higher—regardless of whether the surviving spouse has earned enough credits. Even with this benefit, the surviving spouse may still need to fill a potential income gap.

Managing a need for long-term care

The possibility of a long-term care event is another topic ripe for discussion. For example, what happens if one of you experiences a heart attack or stroke or simply needs help with daily activities? Unfortunately, such an occurrence isn’t unlikely—the U.S. Department of Health and Human Services estimates that someone celebrating a 65th birthday today has an almost-70% chance of requiring some type of long-term care services and support in his or her remaining years. Without a clear plan, the burden on your spouse and finances is perhaps more significant than you think. Click here to read all about long-term care.

Leaving a legacy

Leaving a legacy is where estate planning comes into play. This process is used to create a blueprint for the preservation, management, and distribution of assets in the event of your death and/or mental incapacitation: thus maximizing the value of your estate while minimizing associated costs and ensuring a smooth transfer of your assets to heirs. A common misconception is that estate planning is just for the elderly or wealthy. In fact, if you own a bank account, car, home, furniture, and/or an insurance policy, you have assets. However modest your estate is, you’ll need to establish a plan for how assets are distributed upon your death.

In sum: retirement topics to discuss with your spouse

As you can see, planning for retirement is often overwhelming and, in many cases, more complicated when you need to align your interests and expectations with those of your spouse. Speaking with a financial advisor is often a good move in this case, with a recent Fidelity study reporting that couples who work with an advisor find it less difficult to strike up a conversation about a range of financial and lifestyle topics than those who don’t.

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Vision Retirement is an independent registered advisor (RIA) firm headquartered in Ridgewood, New Jersey. Launched in 2006 to better help people prepare for retirement and feel more confident in their decision-making, our firm’s mission is to provide clients with clarity and guidance so they can enjoy a comfortable and stress-free retirement. To schedule a no-obligation consultation with one of our financial advisors, please click here.

Disclosures:
This document is a summary only and not intended to provide specific advice or recommendations for any individual or business.