Four Benefit-Maximizing Tips for Married Couples


Four Benefit-Maximizing Tips for Married Couples

To stay in step, think about differences in life expectancies, health.

November 20, 2014

In that proverbial perfect world, married couples would reach retirement age together, file for their Medicare and Social Security benefits, make sure those hefty dividend and interest checks were being deposited correctly and spend most of their time traveling, cooing over the grandkids and expanding on their hobbies.

Is that even a fantasy anymore? Here’s a reality check. Husbands nearing retirement are usually older than their wives (four years older on average, according to a study done by the Center for Retirement Research, although the gap is more than 10 years in roughly 10% of marriages). On top of that, in the United States a 65-year-old man can expect to live about five years less than a 65-year-old woman, according to the Organisation for Economic Co-operation and Development. Meanwhile, according to data from the 2010 Census, women earn 79% of what men do.

These are averages – your own situation obviously will be different. But the numbers show what we already know: Retirement decisions for couples are complex, requiring a comprehensive plan that takes into account not just statistical disparities but subjective experience as well. For example, one spouse may have a rewarding and fulfilling job and the other may be counting the days. One spouse may have a physically demanding job that makes waiting until retirement age impossible. Unfortunately, poor health – especially declining health – is a major factor in early retirement.

How should we respond to these challenges? Certainly not by ignoring them. Instead, sit down together and discuss the realities of your situation, your goals – both individually and as a couple – and how you can handle any gaps in your retirement plan. Here are some basic concepts that may help.

Think long term Although the urge to be through with work can be strong, in today’s world people are often retired for a long time – 30 years is a good estimate to work with. Holding off on retiring – or collecting Social Security benefits – can make a huge financial difference over the course of retirement. The same goes for retirement plan contributions – a couple more years of socking away as much as possible in that 401(k) can make things a lot more comfortable in your 80s.

Make a chart showing significant retirement-related milestones for each spouse
There’s nothing like getting things down on paper – although a spreadsheet is fine for the computer literate. Since we’re concerned about gaps, color-code any differences between spouses as to Medicare eligibility, when each can take Social Security, any mandatory retirement dates or early retirement incentives at work, when the older spouse has to begin taking required minimum distributions from a retirement account, COBRA healthcare provisions at each spouse’s employer – anything that’s going to affect your overall planning. Doing this will help you determine where you need to focus.

Maximize your Social Security benefits
As a general rule, the &>higher-earning spouse should try to wait until 70 to begin collecting benefits, although health issues or other considerations may come into play here. Coordinating when spouses take their benefits and the type of benefits they choose can make a huge difference in a couple’s total payout over the course of retirement. Remember, Social Security income is impervious to market downturns, low interest rates and inflation, and it is designed to provide income for your whole retirement. Learn about strategies you can use to maximize benefits.

Coordinating when spouses take Social Security benefits can make a huge difference in your total payout over the course of retirement.

Get professional help
Retirement planning involves many disciplines – investments, taxes, healthcare, insurance, estate plans, budgeting – and the gaps we’re discussing make each area more complicated. Be sure your professional advisors are working together and that you’re sharing your goals – and concerns – openly. Advisors can’t help you manage something they don’t know about. Most couples, once they take a close look, are likely to find that what they really have are two retirement pictures – his and hers, if you will. The challenge is to meld them by filling in the gaps. That might mean buying private healthcare insurance for one spouse for a period until Medicare kicks in, and working a year or two longer for the other. Your own situation will determine where you need to make adjustments – the key point is to identify the gaps, and get professional help in making sure they don’t delay or damage your overall retirement plan.

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