Best Retirement Planning Requires Couples to Align Goals First

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Before couples enter retirement, they should sit down and compare notes to ensure they are united about their retirement plans. Depending on the plans, they can use different strategies to prepare, but the sooner agreements are made, the better their retirement planning can meet their dreams and needs.

It is always better if couples plan on having more than one source of income during their retirement years. This means saving a lot of money in advance. While Social Security can be a reliable source, it is not enough for a comfortable retirement.

Decisions to Be Made to Align Goals

Several decisions need to be made between couples to have a more satisfying and expected retirement. Most likely, if plans are not discussed in advance, each spouse may have very different ideas about what they want to do in their non-working years.

One spouse may want to travel the world, while the other may want to relax at home. One may want to keep their current house so the grandkids can visit and stay a few days, while the other may want to downsize and move to a different state. Also, one may want to start a new hobby, and the other may have big ideas about starting a new business.

Individual Retirement Accounts (IRAs)

Only one person can contribute money to a single IRA, and they must be employed to do so. Each spouse can have their own IRA if they are working, which enables them to save more money for retirement if they both max out their contributions.

Another way a spouse can have an IRA—when one is not employed—is to create a spousal IRA. It is not a joint account—but one opened in the spouse’s name. The employed spouse contributes money to the account, which belongs solely to the non-working spouse. The Internal Revenue Service says you can only do this if you file married jointly and cannot contribute more than your taxable compensation.

A traditional IRA, a Roth IRA, and a spousal IRA have the same rules. They have the same contribution limit of $7,000 for 2024 for those under 50, and those 50 or older can add another $1,000 per year. A couple can contribute up to $16,000 if each one has an IRA.

Each spouse can name the other as the beneficiary on the account, giving access to the funds if one should get sick or pass away. Schwab says required minimum distributions (RMDs) must start by April 1 of the year you turn 73 if you are not already taking them. Afterward, you have until Dec. 31 of each following year to make the withdrawals. You will owe a penalty if you miss a withdrawal.

Roth Retirement Accounts

One way to reduce your taxes during retirement would be to roll over some money in your retirement accounts into a Roth account—a Roth IRA or a Roth 401(k). Taxes will have to be paid on all money rolled over, but it gives you the benefit of using the entire withdrawal later—without losing some of it to taxes. Roth accounts require that the money be in the account for five years before you can withdraw it without a penalty.

You should also know that Roth accounts do not have required minimum distributions. You can keep the money in the account as long as you want or until needed. If the account is inherited, you must deplete it within 10 years.

There are income limits for who can contribute money to a Roth account. Singles cannot contribute the maximum amount to a Roth IRA if they earn more (modified adjusted gross income) than $77,000, and married couples filing jointly cannot contribute the maximum amount if they earn more than $123,000.

Claiming Social Security

Most people wait before claiming Social Security. The longer you wait, the larger your monthly checks will be. If the income-earning spouse dies and they were collecting Social Security benefits, the surviving spouse’s benefits are determined by when the wage-earning spouse claimed benefits. They cannot raise their benefits any higher unless they also have been earning wages and have enough credits.

People who are sick and not expecting to live long may want to collect Social Security benefits early—possibly starting at age 62. The benefits can help them pay for their medical bills and may enable them to help pay for funeral costs.

Long-Term Care

Long-term care is expensive. After a couple turns 65, Fidelity estimates they will spend at least $315,000 on health care.

Because of the cost, couples must decide whether to buy it. If they buy it, there is no guarantee that they will even need it. Medicare does not cover it, but it will cover some short-term stays in a nursing home or provide short-term care at home. Medicaid will pay for it, but you must spend down your assets before applying.

Some life insurance policies offer a long-term care (LTC) rider on them. It is less expensive than a regular LTC policy, which does not cover all expenses. When you need money from the policy for medical care, PolicyGenius says it is often used to help cover the costs of a nursing home, assisted living, and a private nurse.

A life insurance policy with an LTC rider takes money from the death benefit to cover costs. Usually, only about 70–80 percent of the death benefit can be used for LTC. Not every life insurance company offers it.

When a couple works together to get their retirement goals aligned, they can have a much better retirement. They will be on the same page. Consult a financial advisor or estate planner to ensure the best possible results.

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