There are certain benefits to retiring along with a spouse. For one thing, you won't have to go through that transition alone -- you'll have your life partner for support. From there, you'll have your spouse's company during retirement, which could help make that period of life more rewarding.
But it's important to make sure you and your spouse are in sync financially in the context of retirement. So before you end your careers, make a point to run through these important questions.
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1. Should we downsize?
Many retirees find themselves without grown children living at home. If you and your spouse are in that boat, you'll want to talk about downsizing.
If you downsize, you might free up a fair amount of money that buys you different options in retirement -- for example, the opportunity to do more traveling early on. Downsizing might also help reduce your financial stress since you won't be spending as much money on a major expense like housing.
Downsizing could also put a large chunk of cash in your pocket if you own your home outright and can snag a big profit in a home sale. So it pays to talk about the advantages of downsizing, but also, the drawbacks.
For example, downsizing could mean that your grown kids don't have a place to stay in town when they visit. It could also mean having to move out of the community you've come to love.
2. Are we on the same page about spending our money?
Ideally, you and your spouse will enter retirement with a decent sum of money saved up. But it's important to agree on how you'll spend that money.
You may want to tap your nest egg more frequently during the early part of retirement to enjoy more activities while your health allows for them. But your spouse may want to take only minimal withdrawals in order to pass down as much wealth to your children and grandchildren as possible. Have those talks now so that spending during retirement doesn't become a source of conflict.
3. When should we claim Social Security?
The decision to file for Social Security is crucial because the monthly benefit you'll lock in at the time of your filing is the monthly benefit you will generally receive for life (not accounting for cost-of-living adjustments). You can sign up for Social Security as early as age 62. But you won't get your full monthly benefit based on your income history until 66, 67, or somewhere in between, depending on when you were born.
There's also the option to postpone your Social Security filing for a larger monthly benefit. You can accrue delayed retirement credits that boost your benefits up until age 70.
It's important to decide when you'll claim Social Security since those monthly payments will factor into your retirement income. But also, if both you and your spouse are entitled to benefits individually, you'll want to coordinate your filings to get the most out of the program.
Let's say you're eligible for Social Security but your spouse never worked. In that case, they may still be in line for spousal benefits based on your earnings record and filing, so it's important to work through your options.
Retiring with a spouse can be wonderful. Tackle these questions ahead of time so you'll have a game plan you're both happy with.
