Getting married gives you a new partner to help you navigate life's personal and financial challenges, including retirement planning. But it also means reconfiguring a lot of your original plans to take your partner's dreams and goals into account. That isn't always easy.
While I can't do all the negotiating for you, I can point out some of the key mistakes you don't want to make when planning for a retirement with your partner. If you can avoid the following three things, you'll be off to a good start.
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1. Not agreeing on the lifestyle you want in retirement
One spouse may be a big spender while the other likes to save. One might be a homebody while their partner wants to travel. One person may be active and health-conscious while their spouse isn't so much. All of these individual preferences matter when planning for retirement.
Each partner should share how they envision retirement, including how they want to spend their days, where they want to live, and how they think their spending and lifestyle habits will change between now and retirement. Sticking points may come up. It's important to work through them and come to a compromise that works for both of you.
If you don't do this, you run the risk of saving too little for what you'll need in retirement. This isn't the sort of problem you want to find out about in your 60s. The earlier you get on the same page, the better positioned you'll be to estimate your retirement expenses, figure out how much you'll need to save, and then do it.
2. Not planning when each person will claim Social Security
Your Social Security checks will likely provide a significant portion of your income in retirement. But how much you'll get each month will depend in part on when you claim your benefits. The Social Security Administration assigns everyone a full retirement age (FRA) based on their birth year. If you were born in 1960 or later, under current law, your FRA is 67. Those who claim their benefits at the FRA are entitled to what the program calculates as their full benefit, also called the primary insurance amount (PIA).
Eligible Americans are allowed to start taking benefits as soon as they turn 62. However, claiming them before you reach your FRA means a permanent reduction in the size of your monthly benefit while waiting beyond it to claim boosts your checks until you qualify for your maximum benefit at 70. If you wind up living into your 80s or beyond, delaying your claim will result in you getting a larger total lifetime payout from the program. But that doesn't mean it's always the best choice.
If you have reason to think your life expectancy will be lower than average, or you can't afford to delay taking Social Security, signing up early could be a better option for you. You also have to keep in mind that you can't claim a spousal Social Security benefit until your partner has begun to take them.
The spousal Social Security benefit is based on your partner's work record, and between 32.5% and 50% of their primary insurance amount, depending on when one claims it. If one partner significantly out-earned the other, it might be more advantageous for the lower earner to claim the spousal benefit once the higher earner has applied for their checks.
You can explore different scenarios by creating a my Social Security account. That gives you access to a personalized page on the program's website, which includes a tool that can show you what your estimated benefits would be at various claiming ages. It can also help you calculate what your spousal benefit would be worth at various claiming ages, based on an estimate of what your partner will be entitled to at their FRA.
3. Not coordinating how you'll save for retirement
If you and your partner both work, you should agree on how much each of you will save for retirement every month. Have a plan for what you'll do if for some reason one of you isn't able to save as much as you decided. If your financial situation changes, you may need to sit down together and review your retirement plan to figure out where to go from there.
If only one spouse is employed, consider using a spousal IRA if you can afford to do so. This type of tax-advantaged retirement account lets you contribute up to $7,000 ($8,000 for those 50 or older) per year in the non-employed spouse's name as long as the employed spouse earns enough to cover all contributions to their own retirement accounts and the spousal IRA.
No matter what, you'll probably have to schedule check-ins at least annually to go over the progress you've made on your retirement plan and make changes as needed. Find a time when it's most convenient for you and mark it on your calendar. Making small changes like this annually can help you avoid having to make bigger sacrifices on the eve of retirement.
