When Only One of You Retires: Tips for Couples

Continuing a trend that began in the 1970s, two-income households are becoming more and more the rule rather than the exception. For reasons of both financial expediency and personal fulfillment, more and more couples are pursuing individual careers while partnering to maintain the household. 

But what happens when one partner is ready to retire and the other isn’t? Whether because of age difference, a shift in personal priorities, or other reasons, each partner in a union may be on a different timetable for stepping out of the day-to-day demands of the workforce. Though we often assume that couples tend to retire at the same time, a 2018 Fidelity study found that 43% of people disagreed with their partner about when to retire. In fact, the younger the couple, the more likely they were to disagree.  

And by the way, the disagreements aren’t always about the finances. When one partner retires while the other continues working, there are significant social and relational issues that require discussion and clear communication in order to avoid the type of discord that can lead to an uncomfortable household.  

But that’s not to say there aren’t some financial conversations that need to happen, too. Obviously, it’s important for the couple to accurately anticipate the level of household income when the first spouse retires and to be certain that level is adequate for their desired lifestyle. Also, the timing around claiming Social Security benefits deserves careful consideration. While typically the higher wage-earner will receive the larger benefit, it’s important to compare the other partner’s spousal benefit with what they can receive based on their own earnings record. Also, if one partner plans to leave the workforce before reaching full retirement age, they need to calculate the household income based on the lower Social Security benefit that will result.  

Then there’s medical insurance. In many cases, the higher wage earner will be providing coverage for both spouses via a workplace-sponsored plan. But if the higher wage earner retires and enrolls in Medicare before the still-working spouse is eligible, how will they manage the working spouse’s medical coverage?  

As for the non-financial issues, it’s important for the couple to communicate expectations and plans for things like household duties, time spent with hobbies or other non-employment interests, and even boundaries around personal time vs. work time. Especially if the working spouse is operating out of a home office, as has become even more common during the pandemic, it can be vital to establish recognition of not only working hours but also working space so that the retired spouse doesn’t intrude on the other partner’s career pursuits. If the retiring spouse is expecting the other partner to be able to drop everything at a moment’s notice and travel, this can create major friction without lots of clear communication well beforehand.  

Whether you are planning to retire together or at different times, Empyrion Wealth Management is committed to helping thriving retirees create smooth transitions and well-funded retirement lifestyles. Click here to read our report, “Financial Planning Checklist for Retirement.”  

Stay Diversified, Stay YOUR Course! 

Empyrion Wealth Management (“Empyrion”) is an investment advisor registered with the U.S. Securities and Exchange Commission under the Investment Advisers Act of 1940. Information pertaining to Empyrion’s advisory operations, services and fees is set forth in Empyrion’s current Form ADV Part 2A brochure, copies of which are available upon request at no cost or at www.adviserinfo.sec.gov. The views expressed by the author are the author’s alone and do not necessarily represent the views of Empyrion. The information contained in any third-party resource cited herein is not owned or controlled by Empyrion, and Empyrion does not guarantee the accuracy or reliability of any information that may be found in such resources. Links to any third-party resource are provided as a courtesy for reference only and are not intended to be, and do not act as, an endorsement by Empyrion of the third party or any of its content. The standard information provided in this blog is for general purposes only and should not be construed as, or used as a substitute for, financial, investment or other professional advice. If you have questions regarding your financial situation, you should consult your financial planner or investment advisor.