Financial Planning for a Couple’s Age-Gap

Couples usually don’t retire at the same time when they have an ‘age gap’ between them. An age gap relationship is one where there is eleven or more year’s age difference between them. Age-gap relationships are becoming more common as people are choosing to marry later in life with someone significantly younger. This type of relationship requires some additional financial planning.

The latest study from the National Center for Health Studies (2017 statistics), states the average woman is living 81.1 years. In 1960 it was 74 years. In 1960 the average man was living 67 years today the average man is living 76.1 years. The increase in life expectancy is helping to change the age differences in many couples, making financial planning even more critical.

In age-gap relationships, one member continues to work for a decade or longer than the other. The drawing of retirement assets coupled with differing longevity factors presents a financial planning challenge.

Age-gap couples may have up to a half-generation between their ages. They should consider planning for two different scenarios to reflect their age difference. These couples shouldn’t rely on a financial plan based only on the older member’s financial information and longevity factors. Some things to consider for these couples:

The older member may want to delay taking Social Security benefits until their full retirement age unless they have health issues. Delaying the benefits of the older member will benefit both if the older member was the higher income earner.

Health Insurance Coverage

If the older member carried the health insurance and goes on Medicare health insurance coverage will be impacted. This will require the younger one to find new insurance.

Basing the financial plan on the partner with the longer life expectancy will help the combined portfolio last over a longer time horizon. Both expected retirement dates should be included even if they are a decade or more apart.

Tax Consequences

Considering the tax consequences for drawing down retirement assets at two different starting dates is important. With one member continuing to work, they should maximize their pre-tax retirement account contributions. This will off-set moving the couple into a higher income tax bracket. Most retirees have a higher income tax consequence in the first few years of their retirement.

If you are in an age gap relationship we have the skills and guidance needed to help plan your retirement.

Additional Disclosure

The newsletter and links are being provided as a service to you. Please note that the information and opinions included are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. This newsletter is designed to provide general information on the subjects covered. Pursuant to IRS Circular 230, it is not intended to provide specific legal or tax advice and cannot be used to avoid penalties or to promote, market, or recommend any tax plan or arrangement. You are encouraged to consult your personal tax advisor or attorney. Planning services are generally available at additional cost and can only be offered only by appropriately licensed registered investment advisors.

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In addition The Legacy Source specializes in providing strategies and guidance for those who are seeking a better lifestyle in retirement. If you have retirement savings of five million dollars or $50,000, we can ensure it works as hard. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!