It's not always the case that married couples end their careers at the same time. But it may be that you and your spouse are gearing up to retire in the near future -- and that you're growing more and more excited about it by the day.
Retiring jointly with a spouse can be a positive experience, since it means getting to enjoy that change of lifestyle together. But before you move forward with retirement, here are a few key financial matters you'll need to discuss.
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1. When you'll claim Social Security
It may be that both you and your spouse are entitled to a monthly benefit from Social Security based on your respective earnings records. Or maybe only one of you is line for that monthly benefit.
Either way, take the time to figure out when you'll sign up to start getting that money, as your filing age will help determine how much of a benefit the program ends up paying you for life. If you claim Social Security at full retirement age (FRA), you'll get the exact monthly benefit you're entitled to based on your earnings record.
You are, however, allowed to sign up for Social Security as early as age 62, albeit for a reduced benefit (that reduction applies for filing at any point ahead of FRA). Doing so might make financial sense for one of you if the other is entitled to a monthly benefit and will be claiming it later on.
You can also opt to delay your Social Security filing past FRA. For each year you do, up until age 70, your monthly benefit gets a permanent 8% boost.
A delayed filing could make sense of one or both of you if you and your spouse are each eligible for Social Security. It's a good way to set yourself up with more income that doesn't have to come out of your nest egg.
2. How aggressively you'll withdraw from your savings
Ideally, you and your spouse will be bringing some savings with you into retirement. But you'll need to come up with a plan to help ensure that that money lasts while also allowing you both to do the things you want to do.
To that end, try to land on a withdrawal rate you're both comfortable with. That rate might hinge on the amount of money you'll be getting from Social Security, so you may want to choose a filing age before making this decision.
Keep in mind that you can obviously adjust your withdrawal rate as circumstances warrant. If you begin retirement with a 4% withdrawal rate and find that you don't need that much money, you can adjust that rate to 3% and stretch your savings. But it's important to come up with a starting point that works for both of you.
3. Whether you'll be homeowners or not
The idea of living on a fixed income in retirement can be stressful. As such, you and your spouse may want to try to lock in as many fixed expenses as you can.
A home that you own is not a fixed expense. Even if it's paid off, the amount of money it costs to maintain and fix that home can vary from one month to the next. And also, your property taxes can also go up, as can your homeowners insurance premiums.
As such, you and your spouse may decide that you're more comfortable renting a home as retirees. In that scenario, you do risk a rent hike from one year to another. But you'll at least be able to lock in fixed costs for the duration of whatever lease you sign.
Retirement is a phase of life to look forward to, and getting there along with a spouse can make it even more rewarding. Just make sure to discuss these key matters so you're able to kick off retirement in a financially sound manner.
