Should Couples Retire at the Same Time?

Recent data from Ameriprise Financial indicates that more than a quarter of preretirement couples plan to retire together, and 39% say they plan to stagger their retirements and make their exits more than a year apart. The question is, what does retirement look like for an individual and for a couple? At first, it may seem very exciting to be spending more time with your loved one, but can too much togetherness be detrimental to the relationship? Both people may envision vastly different lives for themselves during retirement. Before any decisions are made, you will need to have a frank discussion with your partner regarding your future as a couple in retirement. Here are the pros and cons of retiring together:

As you navigate through these uncharted waters, you will not be doing it alone. You will have a partner in the same boat who is experiencing similar emotional and financial challenges. You can support each other when making the transition from fully employed to retired. If only one of you retires, it may give you both a false sense of security, since one person is still employed and earning an income. For some couples, this leads to overspending as you attempt to maintain your preretirement lifestyle and begin tapping into your savings.

Issues to consider

• Staggering retirement has its financial advantages. With one partner still employed, the couple can continue to boost their savings for retirement. Staggering also allows for partners to maximize their Social Security benefits and delay taking other benefits as well. While you can start taking Social Security benefits at age 62, it is not recommended, as you will receive a reduced rate. However, if you delay taking Social Security until you reach your full retirement age of 66 or 67 (depending on your birth year), your benefits will be higher. If you can delay it further to age 70, you can claim the maximum amount.
• Working spouses can continue to contribute to their retirement savings accounts, such as IRAs or 401(k)s. After a certain age, you can make larger catch-up contributions with tax benefits. For example, the catch-up amount in 2024 for people over 50 is an additional $7,500 on top of the $23,000 limit for all other contributors.
• Consider health insurance benefits before one or both of you are eligible for Medicare. Medicare benefits do not kick in until you have reached the age of 65. If you both retire at the age of 62, you will both need to pay for three additional years of health insurance before Medicare is available to you. If only one of you retires, you can both keep taking advantage of company-sponsored health insurance. Keep in mind that Medicare will not cover all your medical expenses. There is a chance that at least one partner will need long-term care in the future. It is important to understand how Medicare works and what options you have when planning your retirement.
• By retiring simultaneously and relying largely on Social Security income, you may find it not possible to sustain your preretirement lifestyle. For that reason, many retirees seek part- or full-time employment to supplement their retirement income.
• Aside from the financial benefits, some retirees find that working in retirement is a positive experience, one that gives them a sense of purpose and fulfillment. Ideally, retirees like to find part-time work in the field they once worked in and contribute their experience and expertise. Finding a balanced work and retirement life that is flexible enough to accommodate leisure pursuits and hobbies is the goal. It is never a bad thing to continue to earn income, especially in retirement.

Should you retire at the same time as your spouse? While it may seem like a dream come true, think about what the financial reality is. Work with financial professionals to help you sort through all the decisions that need to be made. Have a happy retirement.