When Spouses Clash on Retirement Age: Longevity Risk vs Early Retirement
How can a couple get retirement timing "right" when one spouse comes from a long-lived family and the other doesn't?
Question: I'm 60, and my husband is 62. He wants to claim Social Security, retire, and start using our $2.4 million nest egg because his parents died in their early 70s. He has a strong case of FOMO (fear of missing out) because he assumes he'll have only another decade left. On the other hand, my parents, grandparents and many ancestors lived into their 90s, so I feel I should plan for longevity. How do we reconcile this?
Answer: Even if you and your spouse manage to align on most financial decisions in life, there's one big one you might disagree on — retirement. It's not unusual for one spouse to feel ready to retire while the other feels it's too soon.
The good news is that you don't necessarily have to retire at the same time as your spouse. But it's important to have a cohesive strategy for spending your nest egg and claiming Social Security.
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If you're a 60-year-old female with a family history of longevity, you may be inclined to delay both retirement and your Social Security claim. But if your 62-year-old spouse's parents passed away at a fairly young age, he may be eager to stop working and take benefits at 62 to ensure that he's able to enjoy a few good years of retirement before his health declines.
The problem, of course, is that if your husband wants to start tapping your shared savings, it puts you at risk of running out of money between your family history of longevity and the fact that women generally tend to live longer. And if your husband claims Social Security at the earliest possible age of 62, his reduced benefits could become a problem for you later on.
Here's how to land on a solution that allows your husband to embrace retirement without compromising your long-term financial security.
Plan for the longer life, not the average
If you're expecting to live until your 90s and your husband only expects to live until his 70s, you might assume that meeting in the middle and planning for a retirement through your 80s makes sense. But Roger Fishel, independent financial advisor at Roger Fishel Financial, cautions against this approach.
"When one spouse has parents who lived into their 90s, the household plan needs to assume that lifespan, because she will likely be the surviving spouse for a decade or more," Fishel explains. "Building a plan around his life expectancy puts her at risk of running out of money in her 80s or 90s."
Decouple retirement and Social Security
Your husband may be inclined to retire at 62 because that's when retirement benefits first become available from Social Security. But Fishel insists he can do one without the other.
"Separate the 'retire now' decision from the 'claim Social Security now' decision. These are two different choices, and people conflate them," Fishel says.
Fishel recommends that if the husband is the higher earner, he should retire at 62 but wait on Social Security. If you're the lower earner in your household, having your husband delay his claim until age 67 or 70 dramatically increases your survivor benefit, which Fishel calls "one of the most powerful longevity hedges available."
Build a paycheck, not just a withdrawal strategy
When people enter retirement with a notable amount of savings, they tend to focus on finding the right withdrawal rate. Fishel says there's more to it than that.
"With $2.4 million, the goal isn't just picking a withdrawal rate. It's structuring guaranteed lifetime income to cover essential expenses so neither spouse is dependent on market performance to eat and keep the lights on," Fishel says.
In this situation, a portion of that $2.4 million allocated to a lifetime income source could hedge your longevity risk while freeing up the rest of the portfolio for growth and your husband's desire to enjoy retirement now. To that end, you may want to consider an annuity, provided you understand the costs and pitfalls.
Acknowledge the emotional driver
Your husband's inclination to retire, claim Social Security, and start tapping your savings at 62 might seem reckless. But Fishel says it's important to understand the emotions driving that impulsivity.
"When a spouse loses parents young, there's often an unspoken urgency to live now," he says.
"That's valid."
However, Fishel says the answer isn't to spend faster. Rather, it's to design a plan that lets your husband enjoy retirement immediately while protecting you. At the same time, it's important to acknowledge your husband's feelings about retirement and spending, and consider those when creating that plan.
Make sure your plan holds up to stressors
When you're planning for longevity and your husband may be looking to tap your savings sooner than you'd like, you need a plan that's resilient in the face of setbacks.
Abigail Gunderson, CFP and Senior Wealth Advisor at Tanglewood Total Wealth Management, says with $2.4 million in savings, the focus should shift from whether retirement is possible to how to make it sustainable and tax-efficient.
Just as importantly, says Gunderson, you need to make sure your plan holds up through different market cycles and potentially 25 to 35 years in retirement.
"A trusted wealth advisor can provide objective guidance by modeling scenarios very concretely with Monte Carlo analysis, Social Security optimization, and survivor income projections that reflect your desired lifestyle and decades of income needs at retirement," Gunderson says.
As she explains, an advisor can model a range of real-life scenarios to show you how well your retirement income plan holds up. If your plan can't withstand certain stressors, whether it's prolonged inflation or challenging market conditions early in retirement (known as "sequence of returns risk"), you can work with an advisor to tweak it as needed.
"Through this process, many couples discover they can retire sooner, enjoy their lifestyle more fully, and still maintain the long-term financial security that gives them peace of mind," Gunderson says.
Fishel agrees.
"The reconciliation isn't a compromise on lifespan assumptions," he says. "It's building a plan flexible enough to honor both realities at once."
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