How To Plan When There Is A Significant Age Gap Between Spouses

Hello everyone and welcome back to the Early Retirement Podcast. Now I have to say, I was recently listening to a podcast, and I'm not gonna say the name of the podcast because that would be mean, but they opened it up as saying, welcome back to my podcast. And something about it, I guess, might have rubbed me the wrong way since I'm talking about it on my podcast.

But why do I bring this up at all? Because this is not my podcast. This is truly your podcast. And so when you guys send me a question or you guys say, Hey, this really resonated with me and this didn't. I want that feedback. So thank you for continuing to submit that so that I can make this a better podcast for you.

Now, today's listener question is a great one, and it comes from Jules. And Jules says, do you have any strategies or recommendations for couples wanting to retire together? , but have significant age differences. I am 48 and my husband is 65. Thanks. Do you have a podcast on this topic? I don't see many out there and there are not many out there.

In fact, I did some research on my end to see if I could find some information and there's some information out there, which I think is helpful. I'm gonna consolidate it in today's episode. I'm gonna put a little bit of a twist on it, Jules, where. I want people to know that if you wanna retire together, yes, here's how you think about it.

If you, of course, have a different age or an age gap, if you will, but I'm also gonna talk about what if you want to retire together and together in the sense of, hey, what if you're retiring, but you both have different. Ideas of what that dream retirement is. So maybe you're both on the same path and you have the same goals.

Maybe you have different goals and maybe someone wants to do part-time income and the other, you know, the spouse wants to volunteer more. And what income plays to this and how do your investments tie into this? So what I'm really gonna be talking about today is retirement age gaps and how that changes.

I'm gonna keep it fairly high level. I will go into a little bit of nuance because I just nerd out over that. But I also only say that because I think it's helpful for you. I won't go into the weeds. If you fall asleep during this podcast, then I've done a poor job. So, um, let me know. You can either send me a message of course on earlier retirement podcast.com and say Ari didn't fall asleep.

Um, I've been getting some funny messages from you guys, so appreciate that and, and keep it coming, even if this has just been helpful. That's what I love to do. So please keep rating the show and reviewing it That allows. To be able to retire early, and if you've been listening to the show for some time, you know it's not an early retirement necessarily that I'm really in love with.

I'm in love with the fact that you might not have to do something you don't want to because you've managed numbers well, you've managed your finances well to put yourself in the best position possible. Lastly, this is what I love to do for clients. So if you are looking for a comprehensive, customized, holistic 360 degree strategy of your finances, I would be happy to discuss those with you.

You can see in the description of the podcast episode, or if you're listening on YouTube, you can see in the description there of where you can go ahead and schedule that. So once again, really appreciate all of you who have been submitting questions. And Jules, I'm gonna be answering your question right now.

Now Jules, I'm gonna go through a framework as if you are the same age. Now you're probably going, Ari, that's great, but that does not answer my question even in the slightest because my spouse and I were different ages. I promise I'm gonna connect it to that. But here's why I like to start that way.

Let's get a just a conceptual understanding of what are the different things to think about, and then let's put the age layer on top of it, if that's cool with you. So what I wanna start with is, okay, when does it make sense financially? Where you can retire, your spouse can retire if even you're at the same age, which is essentially the question of when am I in a position to retire?

Okay, so that's high level already. It's helpful, but you already have podcasts on that. So let's take another step and go, okay, when does it make sense for at least one member of a married couple to keep working? Not both, but when should one member keep working? What are the financial benefits? And I'm gonna go through a quick outline of those, but keep in mind, these are the financial benefits.

And if you're already in a position, Your, your finances tell you you can do everything you want to do. I don't want you to necessarily listen to this and go, oh my gosh, that's one extra way I can keep a little bit more money by doing that. Okay, that's great. I want you to keep more money, don't get me wrong, but I don't want you to prioritize the money over a successful life.

And it, a funny example I saw recently as someone who said, Imagine you're gonna go buy something from the 99 cents store and they say, okay, sir, that'll be $1. And you give them, oh, I don't know, a thousand dollars. Well, if you give them a thousand dollars and you bought it for a dollar, okay, so you're getting $999 back.

A lot of people would. Think of that like a tax refund where it's, Hey, why on earth would I want this refund? Because that's not too helpful, right? That money could have been working for me. Now, it's not a perfect analogy, but the reason I bring that up at all is that when it comes to financial planning, some people would be like, oh, I'm so excited.

I'm gonna get a big tax refund. Well, I think of it, of, hey, what could that money have been doing differently? And sometimes I'll even go a step further and go, Hey, what if you didn't need that money at all? What if you aligned your taxes perfectly, just like you aligned your retirement perfectly? Where really you are able to stop working if you don't enjoy it and you're able to do everything you wanna do because you've set up your money Well, so analogy, hopefully it resonates just high level, but here's what I'm gonna walk through the the quick outline.

When does it make sense for at least one member of a married couple to keep working? Number one is if you're not old enough to qualify for Medicare. Number two is if you don't have enough income to comfortably, and I say comfortably, cover retirement expenses. I'm highlighting that comfortably. If you could see me right now, I don't record the podcast as of today with video, but maybe in the future.

But if you could see me, you could see my little quotation marks under comfortably because I don't want you retiring, going, aria hit my number. You know, my spouse and I, we mapped it out and there's no longer gonna be a mortgage, or maybe there is, and we're gonna travel more, and now all of a sudden, You're gonna go, well, I'd rather cut this, or maybe we don't travel that much.

No, I want you to leave in that dream retirement budget. Don't retire and be stingy. I, I'd rather have you keep working until you're in a position to, to fully retire and do everything you want to do. So number one is if one person doesn't qualify for Medicare. Number two is if you don't have enough income to comfortably cover retirement expenses.

Number three is if you need to improve your retirement investing meaning, Don't have enough. One person working can of course assist with that, but it's not assisting in the normal sense or traditional sense of, okay, well if more, you know, we're adding more dollars to the 401k, or we're adding more dollars to 4 0 3 B.

No, the real value is the fact that that's less, that has to come from your portfolio, which allows it to continue on compound. So that's the real value of one partner working is it's not just that you're pulling money from, it's not just, Hey, I don't even, even if it's not a huge salary, even if it's something you want to do, which is why I encourage part-time income so often bringing in 30, 40, $50,000 a.

Plays a massive role that too many people don't consider. So just wanna highlight there. Number four is if you want to increase your social security benefit, remember, social security looks at your 35 highest years of earning. So maybe, you know, you started working at 22, for example, and, and now maybe you're 52.

Okay, well that's 30 years, but the reality is, so five years short, there's some five zeros in there. If that wasn't clear. So now that maybe when you started out in your career, Maybe you are maxing out your social security benefits, which is awesome. Maybe you weren't. So it once again looks at your 35 highest years of earnings.

So what we want to do is maximize that to, to the highest extent, of course, but once again, we don't let social security be the driving factor of when you're gonna retire or not. It's a contributing factor, which is why I always go back to the plan. And I know some of you. Submitted questions of, oh, you're always talking about the plan, the plan, the strategy, the plan.

That's because that's really how a comprehensive plan goes into effect and how a successful retirement happens. We don't do what's called vacuum planning. I hate vacuum planning. Hates a strong word. I think I said hate a few episodes ago, so I even felt after it. I was like, why do I say hate? I dislike it strongly.

Maybe I will hate it. You know what? I hate it. And here's why I hate vacuum planning. People say, Ari, when should I collect social security? Well, that would assume I know exactly when you're gonna pass away. It assumes I know your tax strategy, your investments, which I don't. And so because of that, when I work with clients, I need to know every last detail.

I know my clients pretty much just as well as as their spouses now, of course, in different ways. But when it comes to their family that the family's number one, I'm normally right in that number twoo of I. Everything going on in your world, and many of my clients are like family. Um, and if you're listening to this episode, some of my clients, I know you are.

I hope you're enjoying it and that you're doing well so far this year. So now I get to check in with you all often, but always like saying that. So that's number four is you want to increase your social security benefit, so you just keep working for that. Reason number five is that your retirement income doesn't support the lifestyle that you.

Now, the reason I bring that up is we talked about expenses before of retirement expenses, and you don't wanna be stingy in retirement. You wanna retire and do everything you want to do. That's what I want for you. So this is really a check-in to say, Hey, keep dreaming. Make sure that you're able to do everything you want to do, and you can use.

really one partner working as a little bit of a test run. Okay. What's it like living off of one salary? Uh, does it turn out that we actually wanna spend a whole lot more than we projected, or more often than not, it's the opposite where, hey, we're not spending as much as we thought we'd wanna spend, but it's helpful because it turns out we actually love spending on travel more than we thought.

Or, you know what it turns. That when we go out to eat, we just don't spend that much because the kids aren't here, whatever that may be. Number six, and this is the last little outline here, and then I promise Jules, I'll go to the age question, which is, your job is something you enjoy doing. If one spouse loves what they do, great.

It, it can be so fun and rewarding to work a job if you really enjoy it. Now, I love my job. Haven't done it for 40 plus years. Um, I've done it for some time, but I haven't. Burnt out now, I don't think I ever will, but look, here I am right now talking to you all on a podcast with energy because I love this stuff.

Maybe you get to a point where you don't love what you did. Maybe you loved it earlier, but maybe less so now. Maybe you've never loved it, and it's just been a means to an end, regardless. If you want a little bit more of part-time income or your identity is, Hey, I've always been working. I want to keep working.

Well, then great, you can keep doing that. And of course it's gonna help financially. But here are the considerations. These are what you want to think about. High level when it comes to, okay, when should we retire? When should at least one person consider working? What are the financial benefits? Those are them right there.

Now, sometimes more than sometimes I will tell people, Hey, here are all the financial benefits. And they'll go, okay, great, so retirement savings and income. And, and then I'll say, okay, now everything I just said, forget all of it. And they're like, why? Why would you even go over that then? Well, the reason for it is that is the financial answer, but personal finance is personal.

And I want you to know that if adding one extra year of social security earning. Would make you feel really good because I know you pretending you're a client here. If I go, Hey John, I know that you wanna work an extra year because you wanna maximize your social security. You've worked too hard, but you're in a good spot, John, and you, the reality is you don't need that extra year.

Those little earning, the earnings we're talking about here, John, yes, they are gonna make your financial picture look better, but you wanna make it look really good. Don't spend any money. And John might go, well, Ari, I'm not gonna do that. I have kids to put through college and I wanna be able to take trips and I'll go.

Exactly. The point here is not to nickel and dime. The point is, how can we make sure we're in a really comfortable position to retire? So want to say that on the outline piece. Now, Juli, go to your point on age here. Let's pretend, let's use your example right here, which I'm literally doing on the fly. I'm just pulling up my other screen here, which I know you guys can't see, but, um, you said I'm 48, husband is 65.

How do we think through this? Number one is how much do you guys want to spend that? That's the number one factor. If you determine that based off of the way you guys have saved and invested and you've gone through a basic tax projection, you have a good sense of what taxes might be, and you say, you know what?

Oh my gosh, we are in a position to retire tomorrow. Would you, now I say, would you truly, in the sense of are you ready to be done? W what is that dream age? I if your husband is 65 and Jules, he's saying I am done. Um, Jules, can you please be done with me cuz I want to travel with you. It's gonna be so much more fun.

How do I, you know, how do I do that? You run a projection and maybe your Social security earnings are a whole lot less, Jules, but the reality is maybe you're still in a position to do so. Let's look at the flip side. What if your husband loves working and you're done? Okay, well, you wanna be done and you're 48.

The reality is that, okay, maybe you don't have a whole lot of Social Security earnings because we. 35 years to rely on here. But social security might not be a big driver. In fact, it barely might be a factor for you, Jules. So what we wanna look at is, God forbid anything happens to your husband, when is he gonna collect?

Because I would rather see you be protected cuz let's say that you do retire. Now I'm just gonna use a basic egg. Let's say Jules, you retire in two years. So let's say. , you go through a planning process, you can retire at age 50. Your husband at this point is now 67, and so there's a 17 year age gap there.

Very common. By the way, a lot of my clients have a significant age gap. I would say most of them have a probably 2, 3, 4 plus year age gap. Um, I do have one couple just high school sweethearts, same age, and they're just about the greatest people ever. But I digress. My point is, You are 50 now in this example, Jules, and you've decided that, you know what?

My, between my husband and I, we have everything we want to do and, and we're really excited for our retirement and we're gonna travel more than we thought, or, you know, we're gonna visit children, whatever that may be. So now let's talk about the finances of social security with this. And the defense of this, and the defense of this is the following, you want your husband to delay social security most likely, as much as possible because now God forbid anything happens, you are going to take over that benefit.

So the best form of, of offense oftentimes is defense, which you probably hear about a lot. Um, don't know if you're a sports fan at all jewels, but. Many of my clients are, so I'll come with as many al analogies, excuse me, as I can think of to try to resonate with you all. So now let's tie it back. Okay, so social security, the makes sense.

High level, how do I make sure that I'm protected? God forbid anything happened now, He could collect earlier. Your husband could collect earlier. And the reality is, could you be fine? Well, it depends on how much you wanna spend. The number one thing though, I use Social Security as an example of how do you think about defending a successful retirement?

The way you win in retirement jewels is by not losing. So if you like baseball at all, we're not going out and hitting home runs worse, saying how can we hit consistent singles and doubles so we don't just own the s and p 500. We own international stocks and real estate and small companies. All these different assets that are intentionally going to perform differently.

In fact, we know that, in fact we want 'em to. We want some of these to be down because that means other years it's most likely going to be up. So how can we make sure we have these different levers here? The big thing that I always want to touch on here is when it comes to your income and tax strategy, this is a tremendous opportunity.

Some people go, oh, Ari, tell me how I'm gonna make this. Because you know, my spouse is so much older than me, are we gonna be able to retire? You know, there's such a big age gap. Does it even make sense? It can be an opportunity. It doesn't have to be negative. And here's what I mean by that. If you both retire and your income is very, very low, well all of a sudden, can we do Roth conversions?

Can we do tax gain harvesting, which I talked about in one of the most recent episodes where you can realize a hundred thousand plus dollars and 0% taxes if income is very low. Now we don't. To use that as a excuse if we need to be able to save more and we need to be able to invest more to be okay, but we want to absolutely say, Hey, are we maximizing this to the best of our ability?

So ask yourself is if you feel like today you're in a position to do everything you want to do and you have a healthy amount of savings and invest. Um, in Jules, of course, I don't know how much you guys have. I don't know how much you guys wanna spend. I don't know if there's a pension or rental income or all of these different factors, which of course impact this.

But I want to go through an assumptions of, Hey, what can you think about? And those, the, the outline there, regardless of age, that's a big factor there. So, great. Do we have Medicare coverage? Do. Do we have enough income to be able, if we retire, to do everything we want to do? Cuz Jules, you might be here for the next 50 years.

I hope you are. In fact, I hope it's the next a hundred years. And the last thing I want is for you to have to go back to work because we just didn't plan well. I mean, that's just defeating the purpose of proper planning. What do you need to think about?  if you're retiring at the same time. Now let's look at the flip side.

What if spouses wanna retire at completely different times? So they're same age, but we're gonna go with the opposite. You wanna retire at completely different times? Well, the analysis is actually the same. We just reverse engineer it and go, okay, so we wanna retire. Got it. Okay, that makes sense. How do we most effectively do this if we're not gonna.

Together. Maybe one. One spouse really wants to be done because it's so tiresome and it's impacting their health. While the other person, even though they're the same age, wants to keep working. Okay. If they really enjoy working, yes, it's gonna make the finances look better. We went over that, but how do we make sure we're really efficient?

How do we make sure we're not leaving any money on the table and we don't run the risk? Of running out of money because we didn't plan properly. So these are the main considerations, Jules, when it comes to, okay, we wanna retire together, but we're at different ages. Think about Medicare. Great. So do we have coverage now?

Is that sufficient coverage? How does this impact your? Income jewels, meaning do you feel you're gonna have everything that you want to do for the next 50 years? Because the reality is your husband's life expectancy is likely lower than yours. Now, of course, I don't know all of the health considerations, but throw that on top of there.

It's a big consideration here. If we knew that your husband was gonna. Live the next 30 plus years. Okay, great. So now you'll be 78. What does life look like at that point? Is there long-term care? I, is there an intent for family to assist with these things? Um, what's your asset allocation today and how does that change over retirement?

Can you implement Roth conversions or tax gain harvesting if income is really low, Jules, because you have 50 years to implement these strategies because of that, I would argue you're actually a long-term investor and people go, Ari, what do you mean? I'm about to retire? I now need to be more conservative.

Well, what does conservative mean? Conservative to me means less risky. Is that what it means to you? Think about it for a second. What does conservative mean? Here's what most people think. They think conservative. I need more bonds. I need to protect what I've created. And they are correct. They do need to protect what they've created.

But how do you most effectively do that? You effectively protect that by making sure you outpace inflation. Well, I'm recording this with GarageBand on my computer. Now. I have some editing services that help, but Apple is the main driver behind what allows this podcast to go to all of you wonderful people.

So now I've got Apple and Apple's gonna increase the price of this MacBook Pro, I'm sure. And I wanna be a part. Of those profits. So I own Apple stock. The way you outpace inflation is you own equities. Now bonds play a role here, but if we own too many bonds, that's what we call ultra-conservative, which to me is risky.

People think owning bonds less risky. I think the opposite. Owning bonds, owning cash. That's more risky. Now. It feels good in the first 5, 10, 15 years, but then all of a sudden it's not so comfy cozy because the latter years of retirement, we now have to really nickel and dime, which is the last thing I want you to do.

To me, that's defeating the purpose of having a proper plan. So, Jules, hope this outline was helpful, making you think about. Can you retire? It depends on all of these factors, but this is what you want to think through high level. Once again, if you're looking for a custom strategy, any of you, I love going through this process with people.

Our financial planning process involves a fit call. So number one, do we think we're even a good potential fit? If not, great, let's learn that upfront if we think we can add value. , I'll be the first person to say, Hey, we think we can add value. Far nexus of the fee, but don't work with us yet. Let us show you what it looks like.

So step one is a fit call. Step two is the discovery meeting. I call it the dream meeting. How can we dream what your perfect retirement looks like? And then in the following meeting, I come back, I share my screen, show you, here's what you're on track for. What if you don't hire us? What if you don't hire anyone?

Here's what you can be on track for. And I also show you, Hey, what if you. If you improve, excuse me, with these strategies that we recommend. So hope this was helpful in getting an understanding of retirement, different ages, how we help people to do this. And once again, it's more fun to retire with friends.

So please do share this with friends who think would find value from it. And I'll see y'all next episode. Thank you for listening to another episode of The Early Retirement Show. If you have a question that you want answered in a future episode, you can always go to my. Early retirement podcast.com.

That's early retirement podcast.com, and you can go ahead and submit a question that I'll look to answer in a future episode. Thank you all for listening. Please do rate it, review it, and share it with someone who you think would benefit from this information. If there's anyone out there that you know, I certainly appreciate it and I will see you all each.

Hey guys, it's me again. Please be smart about this. Nothing in this podcast should be construed as financial, tax or legal advice. Consult with your tax preparer or financial advisor before taking any action. This podcast is for informational purposes only.