Planning for retirement generally means taking a close look at your personal needs and goals, as well as those of the person you're married to. But when you and your spouse have a wide age gap, retirement planning can become a bit trickier. Not only are you less likely, in that scenario, to retire simultaneously, but there may also be consequences to one of you leaving the workforce well ahead of the other. Therefore, be sure to consider the following factors when you're dealing with a significant age gap.
1. Health insurance
Medicare eligibility begins at age 65, so if you retire then and give up your group health plan at work, you'll have coverage right away. But if your spouse gets his or her health insurance through you and your employer, and he or she is not yet eligible for Medicare, you'll need to collectively figure out what to do about medical coverage. Though you can obtain insurance through COBRA, the cost can be prohibitive, and your maximum coverage period is generally 18 months. Buying insurance on the open market is also an option, but you might find yourself spending quite a substantial amount of money for coverage that's mediocre at best.
If your spouse counts on you for health insurance, and you're ready to retire, you might consider working a bit longer so that you're not forced to cover that cost for too long before Medicare kicks in. For example, if you're 65 and eager to retire, but your spouse is only 57, that's eight years of paying costly insurance premiums. You might therefore choose to work until your late 60s or even 70 to narrow that gap.
2. Social Security
Having a spouse who's considerably younger means you'll probably want to carefully consider your Social Security filing strategy. If you and your spouse are both eligible for benefits based on your respective work records, and you're eight years older than he or she is, you might hold off on filing until age 70 and have your spouse file at 62. Your spouse will take a hit on benefits by filing ahead of full retirement age, but if you're the higher earner, maximizing yours might be enough to compensate, thereby allowing you both to file and retire simultaneously.
Another thing to consider when filing for Social Security is the extent to which your spouse is likely to outlive you. If your spouse doesn't have a work record and ends up relying on survivor benefits, filing early will leave your spouse with a lower income stream for life. Therefore, you might hold off on filing for benefits until at least full retirement age to ensure that if your spouse outlives you by many years, he or she has a reasonably healthy level of income to work with.
3. Long-term care
It's estimated that 70% of seniors will require some type of long-term care in their lifetime. Now, one benefit of being married to someone considerably younger is that as you age and your health declines, you'll have your spouse around to provide the care you need at no cost. But what happens if your spouse outlives you by many years and ends up requiring care during that time? Without you around, he or she might have no choice but to pay for that care, and boy can that get expensive.
The average cost of a nursing home, for example, is roughly $82,000 to $92,000 a year depending on whether you reside there privately or bunk with a roommate. Even part-time home care can be prohibitively expensive.
That's why you need to look into long-term care insurance, and the younger you are when you do, the better. Applying in your 50s versus your 60s gives you a much greater chance of not only getting approved, but also scoring a better rate on your premiums. And while long-term care is a concern for all seniors, it should particularly be on your radar if there's a wide age gap between you and your spouse.
Your goal in retiring should be to enjoy a fulfilling, stress-free number of post-work years. Just be sure to factor in the nuances that arise when you're dealing with a notable age gap so that you and your spouse don't wind up in a tough spot financially.
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