Broker Check

What Happens When A Couple Has Incompatible Retirement Plans?

by Howard Hook,CFP®, CPA

As published in Private Asset Management on June 16, 2014

Preparing for retirement can be hard enough when both spouses agree it is time to begin the process. But what if one spouse is ready to retire and the other spouse is not ready — or is not ready for their mate to retire? Then what?

As with all life-changing events – and make no mistake about it, deciding to retire is a life changing event – proper planning and ongoing discussion on whether both spouses are prepared to enter this next stage of life is critical if to ensure a smooth transition.

For many High Net Worth Clients this conversation is not so much “Can we Retire?” From a financial perspective, this can be determined through discussions with a couple’s financial advisor who can run cash flow projections and discuss future lifestyle choices (i.e. do you plan to relocate to a less expensive part of the country? Do you plan to travel extensively? How important is it for you to leave money for children and grandchildren?) Most importantly, the couple needs to have an answer for the question: “What do we want retirement to look like for us?”

The answer can and is likely to be different for each spouse. Ideally finding common ground can help spouses – even those who may not agree it is time to retire.

Take, as an example, the situation where one spouse works and the other spouse does not. For the better part of their married lives this has been the arrangement and now after all those years this situation is about to change, big time. For the spouse who is retiring from work, there may be a strong desire to spend more time at home and “relax.” Well, for the spouse who is used to being home alone, this may “infringe “on their alone time or their ability to get things done around the house. Explaining this to the soon-to-be-retired spouse may be difficult since they cannot understand the other spouse’s desire to be alone. “Why wouldn’t you want me around more? We can do all these things together now that I am retired.” A compromise can be struck, whereby the retiring spouse helps out with some of the household chores, allowing the other spouse to retain their alone time. This can free up other time that can be spent together.

Relocation is another issue to consider when spouses retire at different times. A desire to spend more time at the beach house (or ski house) may be complicated by the spouse who continues to work and may not be able to “get away” so easily or spend the amount of time the retiring spouse would like to spend away. Compromise again is the best way to handle this issue. Creative scheduling built around holidays or long weekends, or combined with travel required for business can allow for spouses to spend that time together. Another alternative is the increased use of technology to work from remote sites rather than having to be at the office. The feasibility of this obviously depends upon the type of work being performed.

Many people think the decision to retire and stop working is a binary one. Today I am working and tomorrow I am not working and therefore retired. However, for many people the better solution is a gradual retirement where a reduction in hours (and responsibility) is phased in over a period of time. This works well for both spouses in several situations. For the spouse not ready to retire, reducing their hours at work can be a good compromise with the spouse ready for full retirement. And vice versa, the spouse who otherwise wants full retirement may want to consider a gradual retirement so that the spouse who wants to remain working won’t resent the retiring spouse. 

Continuing to work during one’s retirement years has other advantages besides those mentioned above. Keeping busy during retirement tends to be harder than most people think. Staying on at a job, especially one that you enjoy doing, even in a reduced capacity, helps people keep active which can lead to a more fulfilling retirement, better health and a prolong life expectancy. After working much of one’s adult life, it’s difficult to just stop working and not feel a loss of identity since for many of us work defines who we are. Continuing to work can also allow retirees to feel a sense of purpose and pass on to younger employees their knowledge.

In the end, it always comes down to communicating with each other so that when the time comes to begin retirement both spouses are ready to move into the next phase of their lives happy and comfortable with the decision that was made together.