When you have a partner, you might assume that you need to make sure you retire in lockstep. After all, what’s the good of having a retirement if your beloved isn’t right there with you?
As it turns out, there are actually some benefits associated with retiring at a different time than your spouse.
Here are some advantages to consider as you move forward with your plans.
1. More time to save in tax-advantaged accounts
Generally, earned income is required in order to contribute to a tax-advantaged retirement account.
If one partner retires before the other, the remaining partner can keep contributing to a tax-advantaged account. This can be especially useful if the still-working spouse is getting a 401(k) match. More money for the nest egg!
Finally, it’s also possible to open an IRA for a non-working spouse and contribute on their behalf. With one partner still working, that can go a long way toward boosting overall retirement savings.
2. Bigger Social Security payments
With one person still working, you might have enough income to enable both partners to delay claiming Social Security, meaning a bigger monthly benefit down the road. Combined with a bit of a boost in the nest egg, it could be easier to arrange a more comfortable long-term retirement.
Plus, even if one spouse dies, the survivor will still have a bigger benefit, providing a little more security in their own later years.
3. Lower health care costs
One of the biggest expenses in retirement is health care. If you and your spouse aren’t old enough to qualify for Medicare, it can be especially important for one person to keep working for the health insurance benefits.
Even if the employer-sponsored health insurance covers only the worker, that can reduce overall expenses as only one partner needs to buy insurance from the marketplace.
4. Lower tax burden
Depending on your situation, there might be tax benefits associated with retiring separately from your spouse.
When one person stops working, the resulting lower income can lead to lower taxes for a couple if that lower income puts them into a lower income bracket. A lower income bracket means a lower tax rate. (For the current federal income brackets, see “7 Ways Your Taxes Will Change in 2020.”)
Carefully consider how taxes are likely to impact your finances and consider consulting with a professional to work out how to reduce your tax liability as you and your partner plan retirement.
5. An easier retirement transition
In some cases, retiring at the same time can throw partners together suddenly. After all, with both partners retired, patterns of behavior change and suddenly you’re both spending a lot more time together.
According to some relationship experts, this can cause strain during the retirement transition.
Even if you only offset your retirement dates by a few months, that might go a long way toward helping you ease the transition. By retiring at different times, you have the chance to adjust your schedules bit by bit and get used to spending more time with each other.
6. A better relationship
Not only can retiring at different times help ease the transition, but it might also improve your relationship. With one person no longer working, there might be more time to spend together without overdoing it at the beginning.
Plus, if there are still kids in the picture, the retiree might be able to help out around the house more and be the stay-at-home parent. Having that person available to smooth household activities and transitions can reduce stress on a couple.
I’ve seen this in my own parents’ lives. My dad retired three years ago, before my mom. He’s taken over a lot of the household chores and even watches my sister’s children on occasion.
This role reversal has helped him appreciate my mom’s long years of service to the family, and it’s also given them more time together. Plus, he’s developing a relationship with the grandkids that he finds fulfilling.
Each situation and relationship is different. If you have a partner, deciding when each of retires can be a complicated decision involving each person’s income, how they feel about their job and the impacts on taxes and benefits.
Consider sitting down with a retirement specialist to take a look at your situation and decide if it makes sense to retire at different times — even if staggering your retirements seems counterintuitive at first.
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