Question

“My husband is 53, and I am 13 years younger. During our 20-year marriage, I have been in and out of the workforce, raising children, and getting my education. Now, I plan to return to full-time employment. I am essentially just getting my career under way as my husband approaches the completion of his. None of the retirement seminars address the issue that not all husbands and wives are the same age, nor do they retire at the same time.” What unique problems do couples with a wide age gap face as they plan for retirement? What are some solutions to the situation? What should be the investment strategy?

Answer 1

Retirement decisions are always complex,but they can be doubly so when there's a big age gap between spouses. About 9% of all married couples have an age gap of 10 years or more .

Here are four common problems , solutions and investment decisions.

1. Disagreement on the retirement date  

Often the older spouse is ready to retire before the younger mate .how can they co ordinate their retirement dates?

Advisors offer a simple answer: Don't even try. Staggered retirement dates can be boon for age _ gap couples .A younger spouse who continues to work ,for example,might maintain employer health coverage untill both partners are eligible for Medicare and his or her earnings can reduce the need to draw down the portfolio helping the nest egg last longer.

2. Uncertainty over when to take social security

The social security claiming decision is crucial for age -gap couples.thats because the younger spouse may live decades longer than the older partner and a social security survivor benefit cold make or break his or her later retirement years

To find your optimal claiming strategy try a free calculator such as open social security .com or use a paid service such as social security solutions,which offers claiming strategies starting at about $20.

3.Not knowing which drawdown strategy to use

Age gap couples combined retirement could easily last 40 years and their social security, pensions and other retirement income source s may phase in over a period of a decade or more .

In such scenarios ,the standard advice on safe withdrawal rates can be misleading ,says Dana Anspach of sensible money, in Scottsdale,Ariz .

Some couples for example ,may need to make large portfolio withdrawals in the early retirement years ,but their drawdown rate drops substantially after social security and other income sources kick in.

Online services such as income strategy can help you map out a portfolio drawdown strategy and decide which assets to top first in order to minimise your tax bill.when you know which accounts you will draw from first that will help you solve the asset allocation puzzle .

If an older spouse plans to pull money first from his IRA ,for example ,he or she should shift that account toward bonds ,while a younger working spouse might till his or her 401(k) toward stocks.

4. Paying for long-term care.

Age gap couples have one advantage the younger spouse will likely be able to care for the older spouse if needed.

But what about the younger spouse s long term care needs?

One option is to buy a long term care policy that covers only the younger spouse ,says Ekta Patel, a financial planner in New York .The premiums can be high ,but there's a case to be made for having some long-term care insurance even if it funds only a portion of your needs ," Patel says.