Staggered Retirements
The Center for Retirement Research indicates
that only 20% of couples retire in the same year - 50% still have
one spouse working two years after the other spouse has retired (Source: Money, August 2008).
Often, one spouse retires before the other due to health problems
or a layoff, not necessarily because the spouse chooses to retire
early. No matter what the reason, keep these points in mind if
you are in that situation:
Try to minimize withdrawals
from retirement accounts. Although
you will only have one salary instead of two, it's best to minimize
withdrawals while one spouse is working. It's a good opportunity
to test your retirement budget and to try to reduce your expenses.
Utilize all available
benefits from the working spouse's employer. One
of the most significant retirement expenses, especially if you
don't qualify for Medicare, is health insurance. So, before one
spouse retires, find out if that spouse is eligible for health
insurance benefits through the working spouse's employer. If
that spouse is not currently on that plan, find out how he/she
can enroll. Does he/she have to wait for the annual open enrollment
period or will retiring qualify him/her for coverage immediately?
Delay Social Security
benefits. Especially
if you are retiring before full retirement age, it typically
makes financial sense to delay Social Security benefits. For
a significant number of married couples, the man is older, has
higher earnings, and will not live as long as the woman. Because
the surviving spouse can elect to receive 100% of the other spouse's
benefits, it typically makes sense for the man to wait until
age 70 to claim Social Security benefits, to provide his wife
with the highest possible benefits after his death. On the other
hand, there is usually no reason for the woman to wait beyond
ages 62 to 66 to start Social Security benefits, provided she
can claim benefits on her own earnings record. While the wife's
benefits may be lower when her husband is alive, she will receive
his higher benefits after his death.
Consider all defined-benefit
plan payment options. If you are
lucky enough to be covered by a traditional pension plan at work,
make sure to consider all the payment options carefully before
selecting one. Typically, you will have numerous options, but
your choice will be irrevocable.
[PRINTER FRIENDLY VERSION]
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