Planning When There is a Large Age Gap
Retirement planning for couples with a large age gap can lead to some interesting planning issues. My significant other is 17 years my senior, so some of these issues come into play when thinking about planning our financial future. An age gap can affect many retirement issues: retirement plan contributions and distributions, pension distributions, Social Security benefits, and health care may need to be addressed as part of your retirement plan.
Many couples imagine that they will retire at or near the same time and enjoy a long retirement together. Couples with an age gap of 10 or more years may find retiring together to be difficult or altogether unattainable. You may need to consider private health care insurance for the younger spouse before they are eligible for Medicare. You may also need to consider delaying your Social Security benefits to maximize the income for the younger spouse in situations where the older spouse is the higher income earner. If the younger spouse retires during their high income earning years, they may be missing out on a higher PIA which will lower their individual Social Security benefits.
It may be more financially practical to retire separately. The younger spouse may have access to health benefits at work and have additional years to save for retirement. Depending on your income, the younger spouse may be able to contribute to a Roth IRA for the retired spouse after age 70 1/2 or a traditional spousal IRA between retirement and age 70 1/2. It may be more emotionally challenging for one spouse to enjoy retirement while another spouse continues to work. You may need to consider opportunities for time spent together and appropriate division of labor. My significant other is a great cook, and I'm happy to come home to a prepared meal after a long day at work. I think I will appreciate this when he retires a decade before me and spends his days gardening and sleeping in.
Supporting Each Other
Although the older spouse has put in their time in the working world, the younger spouse may need to be prepared to live a significantly longer time in retirement. It's important to incorporate the needs of both people when planning for retirement.
All in all, there are many complicating factors when it comes to age and retirement. It's best to meet with a professional financial planner to discuss strategies to support each other and fulfill your needs in retirement.