By Bruce Horovitz, Next Avenue Contributor
When my wife, Evelyne, and I got married 27 years ago, the absolute last thing on our minds was retirement.
Fast forward 27 years, with me now 66 and Evelyne turning 56 in a few months, and retirement is fast-becoming one of the first things on our minds. But there’s one problem: Some form of retirement seems likely to suit me sooner — and her later. Welcome to our warped world of age-gap retirement.
We routinely wrestle with our 10-year age difference that shapes and re-shapes our retirement visions. And we’ve got lots of company. Nearly two in 10 married couples in America have at least a six-year age spread between them, according to the Census Bureau. So there are millions of us looking for a logical way to balance our age spreads with the siren song of retirement.
The simple answer to age gap retirement is that there is no simple answer. Everyone’s life journey and retirement plans are different. That said, retirement — particularly for age-gap couples like us — requires forethought aplenty.
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“The biggest problem is that people don’t think about it early enough in the planning process,” says Dawn Doebler, senior wealth adviser at the financial planning firm The Colony Group in Gaithersburg, Md. “Many people arrive at retirement age and only then begin to start thinking about it.”
For advice on how age-gap couples should approach seven of retirement’s most difficult decisions, I reached out to four nationally recognized financial planning experts. Then, I compared their advice with the actual actions Evelyne and I have taken. Off we go:
Dilemma No. 1: When to Stop Working?
The experts’ advice: If the older spouse can squeeze out an extra year or two — or three — of work before retirement, that’s usually a good thing. “The biggest issue is that your retirement pool of money has to stretch up to twice as long” for most age-gap couples, says Kristi Sullivan, owner of Sullivan Financial Planning in Denver.
What we’re doing: I plan to continue working from home as a freelance writer and media-training consultant for at least several more years. I enjoy the work and we need the income, with one daughter in college and another daughter soon-to-be. Evelyne intends to keep working as an elementary school special education aide for another decade or so, in part because we need the health care coverage the job provides for our two children and her. Technically, this leaves us with mismatched retirement dates.
Dilemma No. 2: What to Do When Your Retirement Dates Don’t Match?
The experts’ advice: “The trick is finding the balance between being reasonably comfortable from a financial perspective, but still enjoying your life — and each other — while you can,” says Sullivan.
What we’re doing: Initially, we’re happy to accept what I call “half-a-loaf” retirement. Evelyne will likely still be working for some years after I retire. But because she’s a teacher, she’ll still have lengthy spring, summer and winter vacations. This affords us the potential for solid chunks of travel time that most folks only get in real retirement.
Dilemma No. 3: When Should We Start Taking Social Security?
The experts’ advice: Most people can’t afford to wait until 70 to collect Social Security (the latest you can delay starting to claim benefits), but if you can possibly wait until at least the older spouse reaches 70, this can have a huge benefit for the younger spouse of an age-gap couple.
That’s particularly true for more conservative investors because it’s extremely unlikely they’ll be able match the guaranteed 8% annual growth in benefits for those who wait to take Social Security, says Ben Flood, vice president at Bigelow Investment Advisors in Portland, Maine.
Don’t forget that Social Security income has to last through both of your lifetimes. If the younger spouse is female, actuarially speaking, she not only faces a longer retirement lifespan than her husband, she’s also likely to live to an older age than him.
What we’re doing: We’re bucking the wait-until-70 advice. I reached Full Retirement Age for Social Security (for me, that’s 66) last December and started claiming benefits then. With one daughter in college and another soon-to-be, my accountant and financial adviser both advised that I take this step.
Dilemma No. 4: Should We Buy Long-Term Care Insurance and If So, When?
The experts’ advice: It’s expensive and you might feel like you almost want to hold your nose when you buy it, but long-term care insurance is most affordable if you make the purchase when you’re in your 50s. The younger you are when you apply, the more likely you’ll be approved — and the lower your annual costs will likely be.
“Whatever you do, don’t wait until you’re 70 so have this conversation,” says Flood.
What we’re doing: We goofed on this one. Although Evelyne was still in her mid-50s when we applied for long-term care insurance, I was already in my mid-60s. That made for a longer approval process and a pricier policy. But at least we got this one done.
Dilemma No. 5: How to Handle Pension and Annuity Distributions?
The experts’ advice: If you have an age gap, you want to choose joint and survivor benefits for your pension and annuity distributions. That way, there will be regular income through the lifetimes of both spouses, says Doebler.
What we’re doing: Precisely as advised.
Dilemma No. 6: How to Invest a Portfolio With a Large Age Gap?
The experts’ advice: Because of the age gap, it’s critical to err on the side of being more aggressive as an investor, says Kathleen Hastings, senior portfolio manager at FBB Capital Partners in the Washington, D.C. metro area. That means continuing to own stocks, rather than just bonds, bank accounts and money-market mutual funds. “You need to make sure you have enough to combat inflation over time,” Hastings says.
What we’re doing: We took the slightly more-aggressive route. Even at this stage, our portfolio is roughly 60% equities and 40% bonds — managed by a financial adviser who came highly recommended by co-workers.
Dilemma No. 7: How to Emotionally Prepare for the Older Spouse Retiring ?
The experts’ advice: In advance of the older spouse’s retirement, it is critical to discuss everything from the impending division of labor to how the retired spouse should spend his or her time, says Sullivan.
The key is to avoid resentment between the person still going to work and the one staying home, says Hastings. “You need to talk about it — but few people do,” she says.
What we’re doing: We’re not quite there yet. But we talk about everything — and we plan to deal with this one straight on as my retirement gets closer. Since I’m now working from home, I’ve already happily taken on several additional morning duties each weekday, from feeding our dog and guinea pigs to cleaning up the kitchen after breakfast to emptying the dishwasher to making the bed.
