Friday, May 3, 2013

Why Shouldn't Couples Plan Their Retirement Together?

It might be something you have been looking forward to for many years; the children have all grown up and by giving up work, it's finally time for you and your partner to enjoy your twilight years together in peace and quiet. 

Although it sounds like an idyllic lifestyle, you pottering around in the garden, your other half enjoying precious time enjoying their hobbies, problems can lurk where you least expect them. 

Before you carefully synchronise your retirement date with your partner, have a read through the guide below and discover why you might be better off staggering your departures from work. 

Be canny with your money 


Whilst you may both have been diligent about paying into a pension for many years and are comfortable that you will be able to cope when you lose both your wages, there's no harm in putting a little extra aside just to make your retirement even more enjoyable. Once you retire and can’t earn anymore money it’s important to look after your money. 

If one of you leaves work but the other continues with their job for a while – perhaps a couple of years more – you will be able to reap far greater financial benefits that could be useful in the long run. 

Firstly, continuing to earn a wage means you have longer to contribute into your pension plan, helping to crank up the value as high as possible. Your retirement is something to be enjoyed, a time to treat yourself, not spending it scrimping and saving, afraid to switch on the heating in cold weather. By taking those couple of extra years to boost your savings pot, you could make a difference to the amount of money you have to rely on. 

And speaking of pensions, if you continue to work, you will inevitably delay drawing your annuity from the fund available. If you delay your retirement by a few years, by the time you come to take your pension, the number of years left will have reduced and you will be able to receive a higher amount each month. 

If one of you is still in work, the amount of Social Security you can draw will also increase.

Health insurance


Making sure you have sufficient health insurance in place becomes even more important as you grow older but unfortunately it also gets more expensive.

Whilst you are in employment, this isn't something which causes too many problems as many firms offer health coverage not just for their workers, but also their immediate family. This means that there is no need to either take out a costly private insurance plan nor rely on the government sponsored programme known as Medicaid.
Health insurance is important, but can cost a lot. 

If one person continues to work for a few years, it will be possible to continue to enjoy the coverage which is in place without having to resort to paying a high price for the peace of mind it brings. 

Time to adjust


Moving into retirement may sound like a delicious thought, but many workers find themselves caught by surprise when they finally give up work. Many people anticipate an almost holiday-like lifestyle but not having a purpose and structure to each day can leave individuals without a sense of purpose, especially if they previously held a responsible, demanding or stressful position.

By postponing the retirement of one person, it provides the opportunity for the couple to be able to adjust to the transition slowly. Never having to return to work takes a lot of getting used to; the individual who has stopped working can sometimes find they struggle to find meaning in daily activities and can even feel sidelined. Their partner can also find it difficult having them around during the day, especially if they are used to having some time to relax on their own.

Imagine these difficulties multiplied by two and it gives you some idea of the potential room for problems to occur if both individuals retire at the same time. Experiencing the same doubts, fears and challenges can make the early days of retirement more fraught than fun if both of you are trying to retire at the same time.

Conclusion

In summary, although you might think that retiring together is a rather romantic idea and one which eliminates any discussion over who should give up work first. Whilst this is true, it also provides plenty of capacity for problems - financial, practical and emotional - so in reality, you may well decide to stagger your retirement so that you not only maximise your savings but also make the whole process that little bit smoother.

Bio: This post was written by Sarah Watson who works with leading accountants in Milton Keynes UK.


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