I’m a planner. Always have been. When it comes to retirement, my husband and I are working the numbers, discussing whether we want to stay put or move and talking about how much traveling we want to do.
We are just a year apart in age — he’s older — so the plan has generally been that we would retire together. I’m looking forward to spending even more time with my “boo.”
But a reader raised a question recently that could create problems for some couples: “What can age difference mean when it comes to retirement?”
The Pew Research Center looked at the age gap in couples. For the most part, people marry someone close in age. However, one stereotype proved to be true: Men who are remarrying tend to wed younger women.
“Not only are men who have recently remarried more likely than those beginning a first marriage to have a spouse who is younger; in many cases, she is much younger,” wrote Gretchen Livingston, a senior researcher focusing on fertility and family demographics at Pew Research Center. “Some 20 percent of men who are newly remarried have a wife who is at least 10 years their junior, and another 18 percent married a woman who is 6 to 9 years younger. By comparison, just 5 percent of newlywed men in their first marriage have a spouse who is 10 years younger, and 10 percent married a woman who is 6 to 9 years younger.”
Among remarried women, the likelihood of having a much younger spouse is far smaller than among remarried men, Livingston wrote.
So, does age matter? It can when it comes to retirement.
“As you approach retirement together, that age gap becomes a factor in decisions about when you retire and when you take Social Security, and in planning how much money you need to save and how it should be invested,” wrote Arielle O’Shea for NerdWallet. “Especially if the younger partner is a woman, an age difference can mean you need your money to last longer. Women outlive men on average, which adds additional years to retirement.”
One of the biggest issues when there is an age gap is when to retire.
“Couples with big age differences may need to plan for different retirement dates and life expectancies — with related implications for portfolio-withdrawal strategies, asset allocation, and Social Security filing,” wrote Christine Benz, Morningstar’s director of personal finance. “Long-term-care considerations can also take on greater prominence for couples where there’s a big age discrepancy.”
Benz offered advice on how to plan when there is a significant age gap.
“Couples with big age gaps should craft their plans to accommodate the partner with the longest life expectancy,” she suggests. “That means that a 70-year-old husband and a 58-year-old wife should plan for their portfolio to last over the wife’s longer time horizon — 28 years, on average, and even longer if she has good health and a family history of longevity.”
Be careful about retirement withdrawals, and definitely give more thought to when you both will start taking Social Security, Benz said.
“If the older partner had the higher income over his or her working career, delaying Social Security filing past full retirement age, as late as age 70, may be especially valuable” she said. “Not only will that enlarge the higher-earning spouse's benefits during his or her lifetime, but it will also enhance the lifetime benefits for the surviving spouse.”
For more on her recommendations, read: Retirement Planning When There’s an Age Gap
If there is a wide age gap between you and your partner, you definitely need to have the retirement discussion sooner rather than later. Here’s more on the topic of retiring as a couple:
Is there a big age difference in your marriage that may affect your retirement plans? I’d also like to hear from couples on how they handled the question of when to retire. Did you retire together? If not, why not? And how is your plan working? Send your comments to email@example.com. Please include your name, city and state. Put “Age Gap” in the subject line.
Retirement Rants and Raves
I’m interested in your experiences or concerns about retirement or aging. What do you like about retirement? What came as a surprise? If you haven’t retired yet, what concerns you financially?
You can rant or rave. This space is yours. It’s a chance for you to express what’s on your mind. Send your comments to firstname.lastname@example.org. Please include your name, city and state. In the subject line put “Retirement Rants and Raves.”
Have you decided to make changes to your retirement portfolio based on recent events in the stock market?
Fran Skomo of Pittsburgh wrote: “I was concerned about the market in January but did not move money. Boy did I regret that. So about a month ago I was getting worried about the stock market highs, so I did move a lot of my equity holdings into bonds and even some into a money market account, which is now earning more than my bond and stock portfolio combined. I suppose I am now exposed about 25 percent equity, 30 percent bonds and 45 percent cash equivalent. Until all the trade agreements are ironed out and I see what is going on globally and with third quarter corporate profits results, I won’t be back into the market to any great extent. I am retired, and I have to be careful that my income lasts another 30 years or so.”
Charles Anderson of Chesapeake, Va., wrote: “My wife and I are both retired, age 68. The recent drop in the market lowered our retirement funds. No panic. We lived through worse (1987, 2008/2009), but we read your column on retirement planning with a link to ‘Reducing Retirement Risk With a Rising Equity Glide Path’ that suggests getting more aggressive as you get later into retirement and want to do less traveling etc. This changed our investment strategy. It made sense. Kind of a retirement ‘life happens’ fund. We calculated how much we would need to withdraw in the next 15 years and moved that into short-term investments and left the rest in stocks so we can do what we wished in retirement. Every year we will readjust accordingly, based on our health and family matters. Yes, we took a loss, but it was all gains from earlier gains.”
“I look at stock market losses differently now,” wrote Scott Fossum of Houston. “The October stock market drop put me back three months to the first half of July as measured by the S&P 500. Still up year-to-date, so I’m mentally okay. As long as I only have volatility and not a bear market, this method of rationalizing market drops works for me. I was happy three months ago and I’m still happy now. No need to get complicated and calculated nominal versus real returns, as I can’t see inflation in a three-month time span. If we get a bear market that takes years to recover from, like the ones since 2000, then it gets more complicated, and I look at real returns and would be depressed if I was a ‘buy and hold’ guy.”
Deborah G. from New York wrote: “When the market dropped recently, I think I gasped, but then moved on. That’s because my grandparents lived through the Great Depression. Back when the market crashed in 1987, I was much younger but still had some savings and lost $700 in a single day. That was a lot to me then. I immediately closed my money market fund and put everything into cash savings. When I told my grandparents, they told me I shouldn’t have done that — to never bet against the stock market because it always comes back. I still follow their advice. And I saw that proven still correct after the 2008 crash. While I have little faith in current leaders, and worry if the current Washington insanity will destroy that, I am trying to remain hopeful that my grandparents’ advice stays the course into these uncertain times.”
Deborah continued: “To plan for my retirement, I have decided to prepare to use the bucket strategy — to keep enough cash in my portfolio so that if there is a crash when I am retired, I have enough to go two years without taking anything out of equities, so there is time to recover before I make any withdrawals. I’m not there yet, but that is what I am working towards. I do check my account balances several times a week, but that is mostly because I worry about identity theft, that someone will steal my ID and clean me out. It can be nerve-racking to see the drops, but I also keep thinking about the long game.”
Scott E. from Sheboygan, Wis., wrote, “About three weeks ago, I sold $15,000 worth of stock to free up cash for when — not if — the bottom drops out of the market again as it did in 2008 and 1987.”
On retiring in general, Mark Press of Henrico, Va., wrote: “Looking ahead, what one plans on doing in retirement is at least partly correlated with how much one will need when the paychecks stop. A lot of retirement material focuses on finance but not so much on lifestyle, and that, too, needs to be taken into account. After all, time, too, is a limited resource to be managed.”
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