Retirement Planning for Married Couples

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Retirement Planning for Married Couples

After a lifetime of hard work, you and your spouse should enjoy your golden years doing the things you’ve always dreamed about. However, marriage conflicts compounded by financial difficulties are proving the need for careful, early planning.

Spouses often assume they both see retirement the same way, but that’s not always the case. Working longer, relocating and downsizing are some disagreements which are facing couples approaching retirement.

Regardless of how you envision your retirement years, it is important for married couples to understand how to save and create a financial plan to make the most of your retirement. Here’s four questions to ask yourself as you and your spouse approach retirement.

1. Are we on the same page?

The first step to set yourselves up for success in retirement as a couple is to ensure that you share the same dreams. You should discuss:

  • What your expectations are for retirement, including the lifestyle you want to lead.
  • If you plan to move or downsize your home.
  • How you will manage your money, including how much you’ll spend.
  • When you want to stop working and enter retirement.

Setting expectations early on and planning for changes ahead of time can help couples design their ideal retirement.

2. Do our Retirement Saving Strategies align?

Once you and your spouse have communicated about your retirement expectations, you are ready to start making financial moves. The first step to a successful retirement is to save well and communicate.

There are plenty of savings strategies and tax-advantaged accounts, and a financial advisor can help you understand how to use them to reach your goals. The most popular savings strategies to discuss together includes:

  • 401(k) Contributions: Many employers offer a 401(k) for their employees. This allows you to contribute pre-tax dollars to a retirement account, lowering how much you pay in income taxes that year. Some employers even match an employee’s contribution up to a certain percentage.
  • Double the ROTH IRA Contribution: Married individuals who file taxes separately can contribute up to $6,000 per year into each of their accounts. People over age 50 may contribute $7,000 per year. Married couples who file their taxes jointly can contribute up to $12,000 ($14,000 if over 50) in total to their joint Roth IRA.
  • Saver’s Credit: The saver’s credit is worth a percentage of your contributions. The percentage is either 10%, 20% or 50% . Which percentage tier you fall into depends on your filing status and adjusted gross income. The credit is worth up to $1,000 ($2,000 if filing jointly). The saver’s credit is a great way for low- and moderate-income couples to save for retirement and save money on their taxes.

3. Where do we stand on Social Security/Survivor Benefits?

You may also want to discuss Social Security and if you want to factor Social Security income into your retirement saving strategy.

Your Social Security benefit includes spousal and survivor benefits, which ensures that the death of a partner does not induce financial hardship on the surviving spouse. A surviving spouse may face a financial hardship for many reasons including loss of one Social Security paycheck, reduction or elimination of employer-sponsored retiree medical benefits or pension, or increased expenses due to disability and poor health at an older age.

When planning for retirement and choosing the terms of your payout, consider the long-term needs of both members of the couple in the event of a premature death of either partner. Since this decision will have a lasting impact on your long-term financial health, consider consulting with a retirement income advisor before finalizing your benefit selection.

4. How much do we really need?

Retirement planning and budgeting are important ways to figure out what you need now and will need later. Spend time examining your current expenses; as a rule of thumb you’ll need about 70%-80% of what you spent before retiring in order to live comfortably in line with your current standard of living.

Now that you’ve taken a good hard look at the assets and you have a better understanding of your finances overall, why not reevaluate your will and create or reevaluate trusts to ensure the security of your spouse and/or children?

Financial Calculators are also ideal for retirement planning. A good online retirement tool can make crunching decades of numbers and assumptions a breeze. The best tools allow you to understand the assumptions that are being made and to change those assumptions easily. From monitoring Investments to Cost of Inflation, check out our full list of financial calculators here.

Final Thoughts

Finding the courage to take steps now to protect your spouse is the first step. When you have these retirement conversations, expect to have some disagreements, but keep looking for compromise. And don’t hesitate to consult your retirement income planner for some assistance.