For Couples, Retirement is About Timing

Most of us assume we'll retire at some point. Some couples plan to retire together, but other times it makes more sense to stagger retirement dates. Having one spouse work longer often can help maximize retirement income or preserve health insurance. Other times retirement has less to do with finances and more to do with personal satisfaction. And sometimes it's not really a choice. One spouse might leave the work force because of illness, injury, or unexpected job loss, but the other can't always follow immediately.

Retirement timing usually boils down to dollars: Couples plan to retire when they've got enough money to maintain the kind of lifestyle they want for as long as they expect to live. That number will be different for everyone, and how much couples need to save varies widely based on their ages, debts, lifestyles, and where they live.

One constant, though, is the time value of money. As inflation drives up costs each year, couples will need far more money in retirement just to maintain their status quo. That often leads to a decision to have one spouse—often the higher breadwinner or a much-younger spouse—stay in the work force longer than the other.

Health insurance is another reason some couples stagger retirement. Medicare doesn't kick in until an individual reaches age 65. Very few companies offer health insurance to retirees. That means folks retiring before they qualify for Medicare must pay for their own coverage—and it's not cheap. According to Health Markets, an individual retiring before age 65 can expect to pay upward of $438 per month ($5,256 a year) for single-only coverage. If both spouses retire, that price tag doubles. Even if a couple can afford the premiums, a significant health issue could motivate one spouse to work longer if it meant better coverage or more continuity in care.

For single seniors, Social Security election is primarily about timing. Elect earlier and get less money for a longer period of time. Elect later and get more money for a shorter period of time. For couples, things get trickier, and there are many election and suspension strategies that enable couples to maximize their collective Social Security benefits. The gist is that individuals can elect a reduced Social Security benefit as early as age 62 or delay until age 70 for a maximum benefit.

While the numbers get the most attention, finances aren't the only factor in retirement decisions. Couples should make sure they both have the same kind of retirement in mind. It may seem unlikely that a pair who agreed on most major life decisions would have different views about how to spend their golden years, but it happens. For instance, one spouse may want to travel while the other wants to stay home and play golf. Couples should not assume that they have identical retirement ideals.

Long before leaving the workforce, spouses should discuss how they wish to live in their retirement. This will determine how much money they will need for retirement and how long they must work to get there.