Why you shouldn't retire when your spouse does

Financially, it makes sense to stagger retirements by months, or even years. But there are tricky consequences.

  • By Anne Tergesen,
  • The Wall Street Journal
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For many couples, retiring at the same time seems like the obvious thing to do. After all, taking the plunge together ensures you’ll have more time to enjoy each other’s company and adapt as a couple to a new phase of life.

But from a financial perspective, new research indicates there are compelling reasons to do the opposite — and retire months, if not years, apart.

Among the potential financial advantages: Higher Social Security checks, lower health-insurance costs, and a longer life for your nest egg, with some potential protection against a bear market while one spouse has a paycheck.

“There’s no question that if one of you can work a little longer, it can make a huge difference in your financial security,” says Jason Scott, co-author of a recent study that found that extending one’s working years by just two to five months, depending on your income, can offer the same payoff as saving an extra 1% annually over 30 years.

Longer lives

One reason a delayed retirement for at least one spouse makes financial sense is that people are living longer, says Nicole Maestas, an economist and associate professor of health-care policy at Harvard Medical School.

With one spouse still earning a paycheck, one or both spouses may be able to put off claiming Social Security, which boosts benefits by up to 8% annually for each year of delay between ages 62 and 70.

A job also may offer employer-sponsored health insurance. And a couple with an income may be able to reduce or even stop taking withdrawals from their nest egg. That will leave more money in the portfolio to grow over time and, if a bear market occurs, reduce losses.

A new study by Prof. Maestas concludes that women often have a lot to gain by working longer than their husbands. With more career interruptions, women generally reach their peak earnings in their mid 50s, the study found, while men tend to see their earning power decline throughout their 50s.

Because women are often younger than their husbands and have longer life expectancies, their earnings trajectory indicates they “should optimally retire at older ages than men,” Prof. Maestas says. Instead, when women leave the workforce at 63 — the average retirement age for women in the U.S. is a few months shy of 63 — many quit while in or near their prime earnings years, she adds.

Women who work longer also can generally substantially enhance their Social Security payments. The formula for Social Security averages a person’s highest 35 years of income. By extending their careers, women can typically replace or supplement earlier years of lower earnings with later years of peak pay. Men are generally unable to realize the same payoff because their earnings peak earlier, Prof. Maestas says.

Separate routines

When weighing whether to try staggered retirements, couples should consider factors including age differences and health, each spouse’s job satisfaction and how they feel about the prospect of more, or less, time together. To make the arrangement work, there are practical issues to resolve. Couples need to consider how they will adapt to separate routines and new roles that may upend longstanding behavior patterns.

Therapists emphasize the importance of planning, communication and compromise. “Each person needs to clarify their own vision of what’s important and find ways to talk about their expectations,” says Dorian Mintzer, a psychologist, retirement coach and the co-author of “The Couple’s Retirement Puzzle: Ten Must-Have Conversations for Creating an Amazing New Life Together.”

If the spouse who retires first is relatively independent, he or she may enjoy the opportunity to explore new interests without having to worry about anyone else. Roberta Taylor, a retirement and money coach and Dr. Mintzer’s co-author, points to the example of a recently retired client who is learning to design flower arrangements for a museum while her husband continues to work.

“Her life has really changed, and so have her interests,” says Ms. Taylor.

Intangible benefits

Sometimes the retired spouse may find it difficult to adjust to the loss of the intangible benefits work can provide, such as a sense of identity or the companionship of colleagues. Some may find it hard to navigate such change alone.

“For a lot of people, their identity is tied up in work and what they do,” says Ms. Taylor. “That can be a huge loss. People can get depressed without even realizing it if they don’t feel they have a purpose.”

Before the first spouse retires, the couple should discuss how this is going to change their lives, says Dr. Mintzer. “What will it mean that one person is working more and therefore isn’t as flexible or available?” How will the retired spouse fill his or her day?

The couple should think about ways to divide the household chores to ensure the working spouse doesn’t become overloaded.

Sometimes, the breadwinner can feel the other isn’t “carrying their weight” financially, adds Dr. Mintzer.

If one spouse soldiers on mainly for the sake of the couple’s finances, rather than a desire to work, the couple should consider ways for the nonworking spouse to contribute financially, perhaps with a part-time job.

It is important for the working spouse “to feel appreciated,” says Dr. Mintzer. If that person is ambivalent about their job, he or she should “feel they are getting something in terms of recognition or compromises that are important to them,” such as the final word on vacation or weekend plans.

Ms. Taylor advises couples with staggered retirements to resist the temptation to make important decisions until both retire and have time to think through what each “really wants to do” in this phase of life. For example, Ms. Taylor’s client is now questioning a plan she and her husband have to move to Alaska in retirement. But she understands that a decision must wait until “both are in the same place,” says Ms. Taylor.

Couples who stagger their retirement dates also must carve out time to be together. Ms. Taylor says she tries to reserve weekends for her husband, who retired a few years ago. “I make sure certain times are sacred.”

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