Couples Need Retirement Planning to Address Age Gaps

Jul 9, 2019 Share This 

Retirement_Age_GapIn general, people marry someone close in age. However, when it comes to remarrying, the numbers shift a bit, which likely won’t surprise you.

  • 5% of men in their first marriage marry a spouse who is 10 years younger.1
  • 20% of men who are newly remarried have a wife who is at least 10 years younger.1

That’s a significant increase. The age gap within remarried couples often sparks discussions about when each should retire and can ultimately go to many important and emotional places.

Vastly different retirement dates mean a couple should expect different things from their later years. Yes, they each can continue to achieve their individual goals, yet they really need to plan as a couple for a fulfilling future.

To accomplish their goals as a couple, attention needs to be paid to portfolio withdrawal strategies, asset allocation, the possibility of long-term care, and Social Security filings.1 Keep in mind that delaying when someone files for Social Security past full retirement age, as late as 70, can be valuable. For instance, the older spouse (the man in this case) has earned more than his wife during his working career. If he delays filing for Social Security, it enlarges his benefits during his lifetime and enhances the lifetime benefits for his spouse.1

Craft a Solid Plan

For couples that have large age gaps, a wise plan mainly focuses on the younger partner; the one with the longest life expectancy.

Here’s an example: a 70-year-old husband and a 58-year-old wife; their portfolio should be built around the wife’s time horizon. In this case, that’s about 28 years and could be longer if she’s healthy and/or has great genetics.1

Remember that income from Social Security needs to last throughout both lifetimes. In the case above, she likely faces a longer retirement lifespan than he, and it’s probable she’ll live to an older age, too.

If annuity or pension distribution is in play, the couple will want to choose joint and survivor benefits, which creates regular income throughout both spouses’ lifetimes.2

When it comes to investing, it’s better to be more aggressive. That means continuing to own stocks, rather than just bonds, bank accounts, and money-market mutual funds. It’s also important to keep in mind that, over time, an investor has enough to combat inflation.2

Speaking of investments, beware of required minimum distributions (RMDs) when planning a strategy. Typically, qualified retirement accounts like traditional IRAs and 401(k)s require someone to begin taking distributions at age 70½. However, a separate RMD calculation is applied if one spouse is at least 10 years younger than the older spouse and also the primary beneficiary of the other spouse’s plan. This calculation helps preserve assets for the younger spouse’s presumably longer lifespan by allowing couples to withdraw less money from the older spouse’s plan than is normally be required.3

A Healthy Outlook

Health care costs can be worrisome, so the younger spouse may want to consider staying at a job, even if it’s low paying, because it provides health coverage.

Long-term care insurance can be a smart move. While typically quite expensive, it’s most affordable when purchased by the couple as young as 50. At that age, their application may be approved easier, and their annual costs may be lower.2

That’s a smart move when, again as in the example above, the older man starts Medicare and is paying out-of-pocket for private supplemental (or advantage) insurance, which is generally more expensive than employer-provided benefits. Plus, more in-home healthcare may become necessary. There are never any guarantees when it comes to health, so planning ahead and being financially responsible is important.4

It Can Get Emotional

No matter what age, many couples don’t fully consider the emotional impact of retirement. For couples with an age gap, it can become even trickier. Prior to an older spouse retiring, a heart-to-heart discussion should include all aspects of housework, from walking the dog to cleaning the fishbowl to loading and unloading the dishwasher.2 How the retired spouse spends his/her time while the person is at work means a lot emotionally. Without a clear understanding and expectation, resentment could arise.2

More complications, and perhaps more emotions, can be involved when a couple with an age difference begins estate planning. Maybe there are children from prior relationships. Naturally, a parent wants his/her children to have a share of an inheritance, much of which may have been earned before the second marriage. Plus, with an older spouse, incapacity planning and managing retirement accounts also take on more urgency.4

The internet is loaded with statistics on average lifespan, both with similarly aged couples and couples with age gaps. But no one ever really knows how many years of retirement to plan for. Because retirement is a big financial and emotional transition, it’s important for advisors to encourage couples to keep communicating with each other, including when it comes to paying for retirement.

You can also help equip your clients with the right tools to navigate their important upcoming decisions. The Changing Retirement Landscape is a helpful resource that addresses retiree anxiety, asset management strategy, income options during retirement, and more. Click the link below to access your copy.

The Changing Retirement Landscape Guide


1Pew Research Center via The Wealth Advisor, How will a couple’s retirement look when there’s a big age gap?, November 12, 2018

2NextAvenue, Barreling Towards Retirement, With 10 Years Between Us, February 20, 2019

3Frontier Wealth Management, Retirement Planning Strategies When There is a Sizable Age Gap, Undated

4Super Saving Tips, How Financial Planning Changes When There’s an Age Difference, April 10, 2018


Topics: Retirement Planning