Honey, we need to talk

Dave Kutcher

by Dave Kutcher

How many times has your spouse uttered those words and you cringed as to what might be coming?

Sometimes, though, we do just need to talk. In preparation of retirement, married couples should be sure they have some shared vision of what the years ahead entail. Embarking on the retirement road ahead is a major change both in terms of life in general as well as quite specifically, financial changes in your household.

There are some things you and your spouse should consider ahead of time that will help assure you are ready and able to confront what might be very real financial challenges. Dealing with those forthcoming challenges will be much easier if you both are on the same page, but even if you are not, at least you will understand each other in a way that may help you plan, adjust, and mitigate as needed.

One of the most significant financial considerations you will have as a married couple in retirement is the cost of healthcare. It is important to understand the consequences related to options you have as a couple. As an example, many times, couples decide to retire at the same time even though they might not be the same age. While that sounds wonderful and even seems to make perfect sense, there are considerations related to Medicare age eligibility, as just one example, that could have a significant impact on your financial resources.

You need to consider how you are covering healthcare pre-retirement and how that translates to what is available to you should employment changes be made. If the working spouse today is carrying the health insurance and decides to retire early, potentially losing access to important health insurance, what are you going to do as a couple to fill that insurance gap awaiting eligibility for Medicare? And, even if you can carry coverage under programs such as COBRA, the cost to do so is typically much higher than what was required as a cost sharing arrangement while employed.

Couples should talk about their intentions as to where to live during retirement. Many people think about moving closer to immediate family, warmer climates, downsizing the home to minimize maintenance and upkeep costs, etc.

Packing up and moving elsewhere may or may not be a favorable option for you. There is a lot to consider and spending some time doing some comparative review will help each of you more clearly understand the impact of a move in the years ahead. Income taxes, property taxes, cost of living variances all come into play when making these considerations. Yes, selling your home may yield some extra cash, but how and where you are going to live may cost far more than any profit you take upfront by selling your family home at retirement. We are not saying staying in your long-term family residence is or is not the right thing to do…we are saying you can’t forget to consider the costs of any alternatives that might be on the table.

What about the kids in terms of inheritance? Spouses can have very different views on this topic, one feeling like they should do all they can to minimize their expenditures during retirement to leave their children more assets, while others strongly believe these years ahead are theirs to enjoy and in their perfect world there will be nothing left on the day they die.

It is important to understand how each other feel about this and if your family includes children of prior marriages or nuances such as that, even more so should you plan as a couple to accommodate both of your desires in this regard. It is quite likely this topic will raise difficult questions and perhaps even more difficult answers, but this is a topic that should be strongly considered before retirement so that you can more specifically plan and ideally avoid a major conflict during retirement.

Income changes following the death of a spouse should not be a surprise during retirement. Proper planning and understanding of government or employer sponsored plans and how they provide or not for a surviving spouse is key to reducing financial stress. It is quite likely that when one spouse dies during retirement there will be a change to the income being received in the household. As an example, if each spouse is receiving a social security benefit on their own based upon their own credits earned during their working years and one of those spouses dies, only the higher of the two social security benefits continue to the household for the survivor. If that reduction in income is more than the difference in the future costs of living for the surviving spouse, it may require some careful planning ahead of time. Programs such as life insurance may play a vital role in replacing needed income at the death of one spouse.

The short list above is not all inclusive by any means, but we wanted to bring to light that there are very important topics that should be considered for married couples to help assure success during the “Golden Years” ahead.

My name is David A. Kutcher, a retired Marine Corp Captain. My business partner in the lower 48 is Richard C. Scott, CLU, LUTCF. For nearly 40 years we have been helping folks with their personal retirement decisions. We encourage you to make an appointment and get ahead of your concerns as early as is possible. You can catch us on the radio every Saturday morning, “Retirement in the Last Frontier”, 8:30-9:30 on AM 650, Keni Radio. Frontier Retirement; 10928 Eagle River Road; Eagle River, AK 99577, (907) 795-7452.