Staggered Retirement: Wave of the Future?

Couples retiring together means they can start enjoying all the activities they've been dreaming of for years. Will retiring as a couple work for you? It's a good idea to map out the trajectory of how and when you both would like to leave the workforce and how your plans mesh.

You may find that staggering retirement will work better because you'll boost your total retirement assets and decrease the number of years you draw on them. Also, consider health insurance options if one or both of you are not yet eligible for Medicare — employer-provided health insurance will carry care coverage. Here are other factors to consider when deciding whether to retire together.

• Age difference: The most common reason spouses choose to stagger retirement dates is that the older spouse may be eligible for retirement benefits earlier but may not want to end a career after decades of hard work.
  • A fairly typical age gap of just a few years can cause a larger gap in retirement target dates.
  • One spouse may want to work longer to make up for any past career and income gaps.
• Money psychology: You and your spouse may have different opinions on what you consider to be sufficient savings for retirement.
  • Consider whether the more restless spouse should retire while the spouse with money concerns continues to work.
  • If you start to calculate expenses — monthly amount, net of taxes — about five years before you'd like to retire, you'll see what you'll need to live the lifestyle you've both worked so hard to achieve.
  • Listen to each other's needs.
  • When one spouse retires with income from a pension plan, the working spouse could set aside more money for eventual retirement and potentially take advantage of catch-up provisions for 401(k) and IRA contributions, making each spouse feel more financially comfortable once both are retired.
• Career timing: Will you and your spouse end your careers at the same time?
  • One spouse may have to continue working to be fully vested in the workplace pension plan and thus may have less flexibility to choose a retirement date.
  • The financial hit of losing retirement income may make this option a nonstarter.

Working together
A staggered retirement doesn't have to leave you feeling out of step with your spouse. You can do what's best for both the working spouse and the retired spouse by talking through the financial implications of your out-of-sync retirement. You'll face those issues together.

Your dream of sailing off into the sunset together may be sweet in theory, but the financial and emotional ramifications need to be considered. When one spouse delays leaving the workforce, Social Security benefits increase. A delay of five years can be a hugely positive move for couples who are just on the edge of having enough money saved. The triple power of increased Social Security benefits, greater retirement savings and reduced time to draw on savings adds to a financially secure retirement. Weigh the impact on key benefits and retirement portfolio strategies, perhaps with a financial planner, to be better prepared to decide what's right for both of you.

Retirement can be an emotionally complex transition. Losing one's sense of identity through work can be a major adjustment for some. When a working couple retires simultaneously, they suddenly find themselves at home together more often, without the separation of work they've become accustomed to. This can disrupt their established relational boundaries, creating friction.
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When you stagger retirements, one spouse gets some time alone to begin creating a new identity, and the separation during the day remains stable. Not retiring at the same time can also let couples find their groove in retirement without being on top of each other right away. You'll have time to pursue your own passions.