By: Andrew Rosen, CFP®, CEP®

The other night, my brother and I were sitting on the porch taking in the Summer air and talking about life. Next thing you know, my oldest daughter, Aviva, comes out to join in the fun. We start talking about my bro’s girlfriend and he asks my daughter what she thinks makes for a good relationship. In her infinite, eight-year-old wisdom, she said, “Well, if you want pizza for dinner, and she wants ice cream for dinner, why not compromise and have them both.”

Much like you are now, we chuckled, then realized, she’s kinda right.

Relationships can be difficult at times. There can be differences in wants and needs, pleasures and pains. And sometimes, there’s a substantial difference in ages on top of it all. None of these things are bad, but rather they’re things you’ll have to work on to get through. For this article, I’m going to focus on solutions I’ve seen to the retirement age gap conundrum.

The hardest thing I’ve noticed with couples dealing with a sizeable age gap is that you’ll hit different life milestones at different times. These are usually all very workable in a relationship; however, they certainly provide for some unique financial planning circumstances.

As one spouse nears retirement (what they’ve worked 40 plus years to enjoy), the other spouse may be in the thick of their professional career. This creates an interesting and tricky balance—the retirement needs of one spouse and the career needs of the other. Now-a-days, it’s extremely common to see a household that requires both spouses to earn income. In a lot of cases, quite frankly, that second income is necessary to assure an on-track retirement.

Below are the handful of ways I’ve seen this topic addressed:

  1. They both go part time – This isn’t always on the table, but sometimes the sum of two parts equals a whole. I’ve seen this work really well. Of course, it suggests two things. One, that the older spouse is fine working longer than originally planned (even if in a lesser capacity), and two, that the younger spouse is fine stalling their career for a lesser time and pay future. This can really be a nice option, if you’re able to swing it. The Pro is being able to still do retirement on time, but maybe not all the way. The Con is you’ll find the older spouse is working much longer.
  2. The older spouse works a little longer – Depending on the economics of the situation, another scenario is the older spouse works a little longer. Then both spouses can retire. This works well if the older spouse is a high earner and they stay diligent on saving these additional years of income. For instance, if the older spouse retires at 65 vs 60, and during those 5 years is able to save an extra million dollars, this may be a cure all. It could allow the younger spouse to retire earlier and the older spouse to bend a little. The Pros are the younger spouse can retire earlier, and when they both retire, they’re fully retired together. The Cons are this will delay retirement for that older spouse.
  3. The older spouse retires on time and the younger spouse keeps working – Let’s say both spouses have their savings on track to put themselves in a situation to retire at the same age (let’s call it 60). In this instance, the issue is one spouse will get there 10 years earlier, while the other continues to work. This strategy, of course, has one spouse retired and enjoying the retirement lifestyle, while the other is grinding away. That said, this works for many couples and tends to be the path of least resistance. The older spouse takes over more household duties and it simply takes being creative to make sure that both spouses get what they need. The Pro is not much having to change, if both are being diligent savers. The Con is a need to really prioritize and be creative, especially pertaining to time together.
  4. The older spouse retires on time and younger spouse retires early – If you’re financially in a fantastic position when the older spouse reaches retirement, it’s a no-brainer to both simply retire at the same time. However, that’s too easy for my article. What do you do if you want to strike while the iron’s hot and both enjoy the older spouse’s retirement from day one, but you’re not 100% there? Perhaps, you’re 80% there instead? In this instance, you’d have to get creative with finances. Perhaps sell the big home and move into a paid-up, smaller condo. Or, adjust your retirement lifestyle and spend less. It doesn’t mean enjoy less things, but it may mean renting in Florida for a month or driving on vacations, instead of buying and flying. The Pros are everyone retires on time (or early). The Cons are there are more financial risks and you may have to adjust that “ideal” retirement lifestyle.

I’ve seen it all.

Aviva

Being in the business as long as I have, there are very few circumstances I haven’t seen. Age gaps in couples is no exception. Any obstacle provides a multitude of solutions and generally good outcomes.

When it comes to this circumstance, there’re a few things that are important to remember. First, that you discuss your options (a few of the above may even be relevant to you). Next, discuss what’s most important to you both and find a compromise. Finally, work closely with a financial professional, as there are a lot of ways to get off track and the stakes are far too high.

Regardless of what you decide, hopefully you’ll take some advice from my beautiful eight-year-old daughter and have the ice cream and pizza for dinner!

In his role as Financial Planner, Andrew forges lifelong relationships with clients. He coaches them through all stages of life and guides them to better achieve their life goals. Andrew loves helping others by spreading his knowledge on finance, investments, and the pursuit of happiness/fulfillment. He writes nationally recognized, weekly blog posts on these topics and is a regular contributor to Kiplinger. Andrew has been published in The Wall Street Journal, Barron’s, Financial Advisor Magazine, US News & World Report, USA Today, CNBC, along with many other publications.

For more information or to book a consult with Andrew or the other firm partners, Kyle Hill and David Levy, click the link below.

Andrew Rosen, CFP®, CEP®
Kyle Hill, CFP®
David Levy, CFP®

Financial planning and Investment advisory services offered through Diversified, LLC. Securities offered through Purshe Kaplan Sterling Investments, Member FINRA/SIPC Headquartered at 80 State Street, Albany, NY 12207. Purshe Kaplan Sterling Investments and Diversified, LLC are not affiliated companies.