Women and Retirement – Does Your Husband's Decision to Retire Early Complicate Your Retirement Planning?

Retirement planning can be more complex for women for various reasons. Women live longer, take time away from work to care for their parents or children, and are often paid less than their male counterparts.

To compound matters further, many married men are deciding to retire much earlier than originally anticipated. A husband’s early retirement can have profound effects on a woman’s ability to fund her retirement throughout her lifetime. With careful planning, however, these issues can be successfully navigated to provide peace of mind that the couple will have adequate funds.

Many baby boomers are burnt out from working 20+ years in their careers and feel a burning desire to quit and travel the world. Many men and women are leaving their corporate jobs whether by choice or by design. Retiring in your 50s, may mean that your spouse will need funds to last 40 or more years. Unfortunately, women, due to their higher risk of longevity, bear the brunt of a husband’s desire to retire early. The wife may continue to work after their husband retires to provide additional income, and thus feels increased stress due to suddenly being the sole breadwinner. Ironically, she may feel as though she needs to retire later to offset the impact of her husband’s early retirement. Financially, a wife, especially if she has been the lower earner or worked fewer overall years than her husband, will also have lower Social Security spousal and survivor payments, if her husband chooses to take benefits early.

How can women improve planning around her husband’s desire to retire early?

• Discuss any early retirement decision as a couple and ensure that you are both ready for other emotional, financial, and psychological change. Be supportive and see how you can make each other’s lives more enjoyable in the interim, to see if retirement can be delayed. It may mean that you take more time off or even phase into retirement over time. Most importantly, balance the short term benefits of leaving work with the long term tradeoffs.
• Try to delay taking Social Security. If you are both healthy, you should try to delay claiming until at least your full retirement age. Work with a fee-only financial planner to determine the optimum strategy to maximize your lifetime income based on your age and life expectancy.
• Create a life plan along with your financial plan. Determine how your lifestyle will change after retirement and make sure to share household responsibilities. Create an ideal day, week, month, year in retirement. Write it on paper. Create a Pinterest board or scrapbook of things you want to do or see in retirement.
• Realize there are significant tradeoffs. Early retirement may mean that you can’t gift to the kids as much as you wanted or fund lavish travel plans. Discuss how that might affect your retirement satisfaction in the long run.
• Maximize your pension payments through a "pension max" strategy. If you want to choose a pension benefit that provides maximum yearly income and a small survivor benefit, you need to ensure that your spouse is able to support his or her lifestyle should something happen to you. A "pension max" strategy using laddered insurance will be necessary to offset the impact of an early death of the person who receives the large pension.
• Consider long term care insurance—this can ease the burden of taking care of a spouse and help protect assets so that the caregiver spouse can have sufficient funds for the balance of his or her life.

Retirement planning is far more complex than just your investment allocation and selection of funds.

The many moving parts of Social Security claiming strategies, pension strategies, budgeting, withdrawals, and planning for large expenditures all come into play. Work with a fee only financial planner to ensure that you are making appropriate decisions. A decision to take early benefits may reduce cash flow stress in the short term, but have longer term negative repercussions.

Sorting it all out with a map of your retirement landscape and how to navigate that map, can help you sleep better at night knowing that important decisions you make about retirement are sound.