Planning for Retirement as a Couple in 2022

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Planning for Retirement as a Couple in 2022

Many pre-retiree couples dream of the day when they can retire and sail off into the sunset together. However, there are both financial and emotional ramifications to retiring simultaneously compared to having one spouse work longer than the other. Here’s what you need to know…

As you approach your retirement date, you begin to anticipate not working a 9-5 anymore. This means you have more time to spend with your significant other, family time or pursue various hobbies you’ve put off over the years. While those things are fun to consider, they’re merely perks of retirement — not what fuels it. 

It’s easy to overlook or ignore planning for your shared retirement. Don’t let that happen. The golden years may ultimately be the best of your marriage if you understand each other’s future goals, needs and expectations. Here are some tips on planning for retirement and budgeting as a couple.

Retiring without having completed a realistic budget – that factors in both needs and wants – can lead you to some bumps down the road. You cannot responsibly retire if you don’t have a reasonable expectation for monthly and annual needs net of taxes.

In general, you will need roughly 70% to 90% of your pre-retirement income to continue your standard of living in retirement. As a couple, the good news is that, along with having to plan for the expenses of two people, you can plan on having two people’s income and savings. This can help bolster your spending and saving power.

Consider asking yourself the following questions to help you determine your spending needs:

  • How much do you need per year? 
  • Are there major one-off purchases you are considering? 
  • Will your spending needs change (i.e., based on relocating to a less expensive area)? 
  • Are there any major inflection points — we need $80,000 per year until we reach 75, then we expect our healthcare costs to increase and we need $90,000 per year.

Nowadays, science is keeping people alive longer than ever before. Recent studies tell us that for a couple aged 65 there is approximately a 50% chance at least one of the two lives past 90. At CKS Summit Group, we encourage our clients to use an age 95 assumption unless their personal health history clearly indicates we should use another age. 

Another factor to keep in mind when considering the duration of your retirement is Social Security, Social Security replaces only about 40% of a median wage earner’s income in retirement. The average monthly benefit from Social Security was just $1,259 as of June 2020, or a little over $15,000 a year, according to the Social Security Administration (SSA), which reported that 45.8 million retired workers and 3.1 million dependents collected those benefits that month.

Those benefits are due to anyone who has worked at least ten years and earned at least 40 work credits. There is no penalty for being married, and benefits will not be reduced. In fact, there’s a chance one member could bump up his or her Social Security if it’s substantially lower than the other person’s. 

When you first start your 401(k),  you have to include the name of one or more beneficiaries, the people who will receive the money, if you were to pass away. It’s very important to ensure this information is as up-to-date as possible, and re-evaluate in the wake of any major life event, such as a marriage, the birth of a child, a divorce, or a family death.

Changing your beneficiaries can be done easily by contacting your brokerage firm if you have an IRA or the human resources representative who administers your company’s 401(k) plan. Most IRA providers and employers allow you to name a secondary beneficiary in the event that the primary beneficiary is unable to receive or utilize the funds.

If you and your spouse/partner are considering retirement, sit down with each other and clearly define your goals. Having these prepared answers will help your advisor understand the feasibility of your retirement plan and help them build a plan to align with your goals. 

Ask yourselves questions such as: 

  • When do we want to retire? 
  • What do we want to do in retirement? 
  • How much money do we want to spend and/or leave behind? 
  • What resources do we have to accomplish these goals? 
  • Do our individual goals align with what we want to accomplish together? 

It’s important to talk everything out with a trusted advisor who can help you plan for retirement.

Financial advisors can provide an estimated outlook on the impact and make recommendations for alternative measures if necessary. At CKS Summit Group, our focus is to bring you fresh new ideas for your retirement income.

Contact us here today to discuss which retirement strategy is best for you!

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We believe the right mixture of carefully chosen non-stock market and managed market accounts can create a blended portfolio which is capable of producing increasing income, stable growth, preservation of principal, safety and flexibility all at the same time.

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