Current Thinking

Are You and Your Spouse on the Same Page When it Comes to Retirement?

A blog by Rich Rausser, CFC, QPA, QKA, Senior Vice President, Pentegra Retirement Services – February 14, 2017

It’s Valentine’s Day. With that in mind, I thought it would be topical to focus on relationships in today’s blog post—for starters, “Will you and your spouse have to rely on benefits from only one retirement plan?  Have you and your spouse discussed your retirement expectations and do you share the same vision of your retirement lifestyle?” Being on the same page with your spouse about retirement is a goal worth pursuing. Now may be as good a time as any to start the conversation.

Different couples have different lifestyles
According to the U.S. Department of Labor, 60.6% of married couples have two working spouses. However, not all employers offer retirement plans for their employees – particularly not for jobs that are part-time. There are also a significant percentage of families where one partner has opted to take a break from the workforce to stay at home to raise children.  As a result, couples are often forced to rely solely on one person’s retirement benefits.

What does this mean for your retirement savings strategy? This makes it even more important to save as much as you can as early as you can in order to sustain the lifestyle you envision post-retirement. In fact, the vast majority of those who stay-at-home are not saving for retirement – most are relying on their employed spouses or partners. This can be even more precarious if there’s a change in life circumstances, such as an unexpected injury, death, separation or divorce, which could place both partners in a vulnerable position.  My advice—don’t wait for this to happen before you take the necessary steps to help protect your financial future. Even small savings can quickly begin to add up – the key is to start saving as early on as possible and to do so on a regular basis. Don’t wait and miss out on all the advantages that compounding can offer. Whether you save through a 401(k) or an IRA—such as a spousal IRA which allows a working spouse to contribute to a non-working spouse’s retirement savings—get started now.

The age factor
You and your spouse may each have a retirement age in mind, but have you shared that information with each other? Many of the decisions you’ll have to make may hinge on your age and whether one of you is still working. Health insurance coverage, Social Security benefits, and the amount of income you have may all be affected. Spouses often retire at different times, and that’s okay as long as you plan ahead, agree on the timing, and cover your bases in terms of having sufficient income and insurance coverage.

To work or not to work
Would you or your spouse be surprised to find out that the other wants to work during retirement? Many retirees become consultants in their fields or turn a hobby into a business after they leave the work force. Talk to your spouse if you’re considering a part-time or full-time job after retirement, and get his or her reaction before you make a decision.

Your income
Maybe you can live on love when you’re 20, but when you’re retired, you need actual money. Plan to sit down with your spouse and your financial professional and determine how much income you can expect to have in retirement (based on current savings rates, projected investment growth, etc.) If you and your spouse have separate retirement plan accounts or investments, make sure you know the amounts in each and come up with a tax-efficient strategy for making withdrawals during retirement. You’ll also want to consider the most advantageous age for each of you to begin receiving Social Security benefits. It’s important to keep in mind, that stay-at-home individuals will only receive their own Social Security benefits if they have worked a total of at least 10 years. Otherwise, they will only be eligible to get spousal benefits at age 62, which equals half of their spouse’s full Social Security retirement benefit.

Talking with your spouse about retirement can make the transition easier for both of you. Take the time to sit down and discuss your current financial situation and your retirement goals. There’s no time like the present. After all, what could be more romantic than starting to plan the rest of your life with the one you love on Valentine’s Day?

About the Author

Richard Rausser

Richard W. Rausser has more than 30 years of experience in the retirement benefits industry. He is Senior Vice President of Thought Leadership at Pentegra, a leading provider of retirement plan and fiduciary outsourcing to organizations nationwide. Rich is responsible for helping to shape and define Pentegra’s viewpoint on workplace retirement plans, plan design strategy, retirement success and employee savings trends. His work is used by employers, employees, advisors, policymakers and the media to produce successful outcomes for American workers.  In addition, Rich is responsible for Pentegra’s Defined Benefit line of business, which includes a team of Actuaries and other retirement plan professionals as well as Pentegra’s BOLI line of business.  He is a frequent speaker on retirement benefit topics; a Certified Pension Consultant (CPC); a Qualified Pension Administrator (QPA); a Qualified 401(k) Administrator (QKA); and a member of the American Society of Pension Professionals and Actuaries (ASPPA). He holds an M.B.A. in Finance from Fairleigh Dickinson University and a B.A. in Economics and Business Administration from Ursinus College.


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