Many couples don’t always plot retirement on the same date or year. According to a study in 2015 by Cambridge University Press, only 10% of couples have synchronous retirement years. This leads to much disagreement about what age they plan on retiring. For others, circumstances like an unexpected job loss or health issue push spouses onto separate retirement schedules.
When one spouse retires and the other keeps working, the couple must understand the effects on their finances, timetables/schedules, and long-term goals. Here are three critical conversations that couples should have about syncing two retirements to a shared Life-Focussed (aka Lifestyle) Financial Plan.
1. Discuss your reasons and goals.
If you and your spouse could both comfortably retire together, it’s important to ask each other, why? And why not? What core money and life issues put you on different retirement timelines?
Does one of you love your job, and the other can’t wait to stop working?
Is one of you worried about running out of money in retirement?
Are you picturing a blank weekly diary you don’t know how to fill?
Are you worried you’re going to drive each other (even more!) crazy?
Retiring — or not retiring — isn’t necessarily going to solve any of these issues. Talk to each other about what you want to accomplish separately and together in the next part of your lives. Take a blank calendar and plot out what your Ideal Week without work might look like. And if you’re not on the same page about your progress towards financial goals, schedule an appointment with your financial planner, preferably with some coaching training. These conversations will give both of you some clarity about the best time for each of you to retire.
2. Discuss schedules and responsibilities.
Even if the working spouse chooses to keep working, seeing their retired spouse lounging around and playing an extra round of golf could breed resentment. Have a conversation about who handles what at home. The retired spouse might take up additional responsibilities, like grocery shopping and cooking meals. If the retiree is handy, they might make repairs and remodelling projects part of their new retirement routine. And scheduling a weekly lunch date with your working spouse could be a nice break for both of you.
But the new retiree also shouldn’t feel guilty about enjoying retirement. If money isn’t an issue and the working spouse regrets missing out on weekday tennis and sprucing up the spare bedroom, maybe it’s time to make retirement a shared life transition.
3. Review your financial plan.
Retiring separately can create some complications when it comes to health care. If the retiring spouse is leaving their employer-subsidised private medical plan, they may be able to jump on a plan offered by their spouse’s employer, purchase private healthcare or ‘self-insure’.
Health care is one line item on your household budget that might increase as your monthly income decreases. Are you and your spouse prepared to tighten the family belt? Or are you going to spend more on recreational activities now that one of you isn’t working? Are you considering other sources of income, such as taking pensions early before full retirement age, making early withdrawals from your private pensions, or even working part-time?
Much like deciding when to retire, there are no right or wrong answers to these questions. Most important is coordinating every part of your Financial Plan so that you and your spouse get the best life possible from your money in retirement.
Ask us to demonstrate some of our retirement coaching tools, such as your £Lifeline, Visioning, and Ideal Week in Retirement. Let’s set up an appointment so you and your spouse can work through these tools and make a plan to get you both excited about retirement. We can then cost it out and check you’re on track to living your best life before you get too old to enjoy yourselves!
Sharon Sutton is a Chartered Financial Planner and holds a Certificate in Relational Financial Planning.