Aging Options

Couples With a Big Age Difference Between Spouses May Need Some Special Retirement Planning – Including a Financial Dashboard

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To make a marriage work, what’s the ideal age difference between partners? While statisticians may be able to give a technical answer to that question, the fact is that any marriage can work, no matter which partner is older and by how many years.

Still, as we read last summer in this article from the GoBankingRates website, there are some particular considerations couples with a large age gap need to make as they plan for retirement. Advice that might work just fine if spouses are a few years apart in age could be problematic when there’s a decade or more between each partner.

We felt this was a timely bit of information to share. Moreover, while we feel every couple needs a financial dashboard (just as singles do), we feel particularly strongly that couples with a big age difference between spouses can see major benefits from having a dashboard as they attempt to peer into their financial future.

Big Age Difference Requires Extra Preparation

“Differences in age take extra consideration when you and your significant other are planning retirement,” says the GoBankingRates article. “If one spouse is much younger, standard retirement advice may not work for age-gap couples.”  That applies, the article claims, to everything from when you retire to how much you spend to how you strategize your Social Security benefits.

If you stop and think about it, the implications of that age gap between partners seems clear. “Early retirement for a younger spouse can be very costly,” says the article, “and ensuring that that partner will have sufficient income to last the duration of his or her life is a crucial aspect of retirement planning for these couples.”  For that reason, it continues, “There are several things to keep in mind for spouses born years, if not decades apart when it comes to retirement planning.”

Both Spouses Should Maximize Earnings

“It may sound simple,” says GoBankingRates, “but the more you earn during your working years will stand you and your spouse in good stead when the time comes to retire. If you can work past the typical retirement age, any additional income you can earn now will increase what you will have later.” In other words, if your spouse is considerably younger than you are, you may need to adjust the timing of your retirement, especially if you’re the primary earner.

But it’s not just the “senior partner” who should keep working longer, says the article. “The younger spouse might want to work for a few more years as well. With a longer work history and (hopefully) higher salary, some younger spouses may continue collecting a steady income to improve their financial situations and add to their employer-sponsored pensions or retirement plans.”

As for your investment strategy, since one spouse is likely to outlive the other by a considerable period, growth is key. “If investments are part of building your nest egg, experts agree that switching to a more stock-based portfolio, while keeping spending low, is the best plan for growth,” says GoBankingRates.  

Best Scenario: Earn More, Spend Less

Unless your household has plenty of wealth, saving will be highly important, which means spending-control should be part of your plan. “One frequently used rule of thumb for retirement spending is known as the 4 percent rule,” says the article. “You add up all your investments and withdraw 4 percent of that total during your first year of retirement. In subsequent years, you adjust the dollar amount you withdraw to account for inflation.”

But the GoBankingRates piece suggests this spending plan is potentially too aggressive. “With a younger spouse in the picture and the longer timeline a couple will have together, a drop to 3 percent or lower, if you can afford it, is recommended.”

Optimizing Your Social Security Benefits

Social Security, of course, is a critical element in the retirement strategy for most seniors, providing support to workers and their families with a guaranteed source of lifetime income, adjusted for inflation. But as just about everybody knows, benefits can vary widely depending on the age you start receiving payments. What’s more, your benefits can often affect the payments your spouse gets.

While beneficiaries can start receiving Social Security as early as age 62, if you do, you’ll get a reduced amount for the rest of your life. Your full benefits don’t actually begin until reaching what’s called “full retirement age” which is between 66 and 67 for most people. Delay starting benefits until age 70 and you’ll maximize those payments.

“If you don’t need the money early and expect to live a long life, hold out as long as you can,” the GoBankingRates article advises. Not only will you earn more – and potentially save more – but if your spouse outlives you, she or he may be entitled to your full benefit for as long as they live, plus those inflation adjustments. Maximize your earnings now, and your spouse might still be enjoying higher benefits and greater security decades from now.

Spouse Age Difference Can Reduce RMD Withdrawals

Here’s a wrinkle some of us didn’t know about: the age of your spouse can affect the required minimum distribution (RMD) from your retirement accounts each year. “You generally must start taking withdrawals from your IRA or retirement plan account when you reach age 73,” says GoBankingRates.  “However, if your spouse is more than 10 years younger, and your beneficiary, you can withdraw less of a required minimum distribution (RMD) from your IRAs and retirement plan accounts”

The difference is in which IRS table you’re required to use, and while that difference isn’t much, every little bit of savings helps. You’ll find the details here on the IRS website.

Pension Planning: Lump Sum or Annuity?

Pensions may be less common than in years past, but millions of workers still retire with one. For spouses with a big age gap, the strategy you employ when receiving your pension benefits can change.

“Most pension plans push a lump sum payment when you retire,” says GoBankingRates. However, with an age difference between partners, you should consider taking the 100 percent maximum joint and survivor annuity option.” With that option, “payments will last for the rest of the annuity owner’s life and the life of the other person. Because the second person is an annuitant, as opposed to a beneficiary, the timeframe for the payment will most likely be longer, and therefore the tax liabilities will be spread over a longer period.”

The downside, of course, is lost liquidity, says the article: the lump sum isn’t available should a big expense arise. Still, steady payments for life are a huge plus, says GoBankingRates. “This [annuity] option can offer peace of mind, knowing that one’s spouse will have reliable income when they are gone.”

Find the Right Financial Planner

The article concludes with the observation that spouses with a big age disparity have particular challenges in planning for retirement. We agree with the suggestion that couples should do their research and consult an objective financial planning expert. But the strongest recommendation we can make, says Rajiv Nagaich, is for these couples to utilize a planning tool called a financial dashboard.

“I urge just about everyone to use a financial dashboard,” says Rajiv Nagaich, “but I think it’s especially powerful for couples with a large difference in ages. Let’s face it: odds are the younger spouse will outlive the older one by two, three, even four decades! How will you plan for possible scenarios? How will you make spending decisions and investment decisions? What will be the impact in 30 or 40 years from the decisions you make today? A financial dashboard is the tool you need to answer those questions, and many more.”

There’s much more to say here, but our best advice is to contact us at AgingOptions or Life Point Law and let us recommend a financial planner who can help you prepare this powerful planning tool. “Old or young, single or widowed or engaged or married, you will benefit from having a financial dashboard,” Rajiv states. “I can practically guarantee it!”

Breaking News: Rajiv’s New Book is Here!

We have big news! The long-awaited book by Rajiv Nagaich, called Your Retirement: Dream or Disaster, has been released and is now available to the public.  As a friend of AgingOptions, we know you’ll want to get your copy and spread the word.

You’ve heard Rajiv say it repeatedly: 70 percent of retirement plans will fail. If you know someone whose retirement turned into a nightmare when they were forced into a nursing home, went broke paying for care, or became a burden to their families – and you want to make sure it doesn’t happen to you – then this book is must-read.

Through stories, examples, and personal insights, Rajiv takes us along on his journey of expanding awareness about a problem that few are willing to talk about, yet it’s one that results in millions of Americans sleepwalking their way into their worst nightmares about aging. Rajiv lays bare the shortcomings of traditional retirement planning advice, exposes the biases many professionals have about what is best for older adults, and much more.

Rajiv then offers a solution: LifePlanning, his groundbreaking approach to retirement planning. Rajiv explains the essential planning steps and, most importantly, how to develop the framework for these elements to work in concert toward your most deeply held retirement goals.

Your retirement can be the exciting and fulfilling life you’ve always wanted it to be. Start by reading and sharing Rajiv’s important new book. And remember, Age On, everyone!

Photo Credit: Associated Press

(originally reported at

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