“It’s important for those nearing and planning for retirement to consider what kind of retirement they want,” says Osmar Garcia, Northwestern Mutual financial advisor and co-founder and CEO of Garcia Wealth Management in Conway, Arkansas. “Do you want to travel often? Be close to family? Sit on a beach? Retire by age 65?” Garcia asks. Additionally, other decisions can affect your health care, long-term care, and more. Here are the most important financial decisions for retiring couples to make—together—before ending their careers. “If you opt to take retirement benefits early at 62, the monthly benefit is reduced to 71.5 percent of the full retirement amount,” Keshishian says. “Conversely, just as your benefits are reduced by taking them early, it will increase by about 8 percent annually if you delay taking them.” Keshishian advises most clients to wait until the age of 70 to initiate benefits. Consider the following scenarios: “If your monthly benefit at full retirement age is $2,700 ($32,400/year), taken early at 62, it would be reduced to $1,800 ($21,600/year),” Keshishian explains. “Conversely, by waiting until 70, your monthly benefit would be $3,400 ($40,800/year).” Over a year—and especially over a lifetime—this amount can make a significant difference in your financial situation. “Given that, as a population, our longevity is increasing, and many are looking at a 30-plus year retirement, carefully review your choices when it is time for Social Security,” Keshishian adds. Alyssa Jennings, an Overland Park, Kansas-based financial advisor at Edward Jones, says there are other factors beyond age that married couples need to consider. “For example, it may be beneficial for lower-earning spouses to claim spousal Social Security benefits rather than taking their personal benefits,” Jennings explains. “Here, too, the lower-earning spouse will receive bigger monthly payments by waiting until full retirement age before filing for benefits.” Another consideration for married couples is the survivor benefit. “The higher wage earner (with the higher Social Security benefit) may want to delay taking Social Security until the full retirement age (or even up to age 70) to maximize the survivor benefit if they expect their spouse could live longer than them,” Jennings explains. “However, if they are younger than their full retirement age, and their earnings exceed a certain amount, their Social Security benefits will be reduced,” Jennings says. “That said, when the individual reaches full retirement age, the individual’s benefit will be adjusted to account for the amounts withheld due to earlier earnings.” “A more comprehensive plan might include some type of guaranteed income (e.g., a pension, annuities), tax-deferred retirement accounts like an IRA, and post-tax savings vehicles like Roth accounts,” Garcia explains. Garcia also recommends considering whole life insurance. “It can build cash value that’s not affected by the markets and provide a lifetime death benefit that protects your family during your working years.” In addition, Garcia says non-qualified investments are something else to consider since they can provide flexibility to assess your money before retirement.
Has your tax situation changed?Has the law changed in a way that impacts you?Are you still in contact with the people you’ve named in your document—and are they all still alive?Have beneficiary designations been updated?
“Retirement is a good time to check all of that, and if you don’t have your documents together, retirement is a perfect time to get that checked off the bucket list,” Walny says. Something else retired couples may not want to think about: a nursing home. Again, this is one of the statistics related to people living longer, and according to Walny, the probability that one of you will end up in a nursing home is pretty high. “Nursing homes are expensive and can run $5,000-$10,000 per month, so some thought should be given to whether that sort of care is a concern and how it should be dealt with,” Walny says. Straight-up saving money is one option, and if you don’t wait too long, getting long-term care insurance may still be viable. “Otherwise, some specific Title XIX planning might be an option; in any case, this is an important conversation that many people put off for too long and, in doing so, options will be forced on them,” Walny adds. “Generally, the moment you retire, you are paying for what you don’t need, whether it is property taxes based on a big house, monthly HOA fees, or maintenance,” Sykes explains. Instead, Sykes recommends downsizing to cut costs—and save or invest that extra money. “You could also choose to rent and put all of the money in the bank.” If you move out, Sykes recommends finding a one-story residence. If the home has steps, make sure the primary bedroom is on the first floor. “Find something that is wheelchair-friendly and also think of a separate bedroom and bath for a caretaker, so you have the option of staying home in the case of an illness or accident.” And if you want a mortgage, Sykes recommends getting one that you can pay off relatively quickly. “If you have a lot of income in the first part of retirement, use that to become debt-free since studies show that the most common cause of anxiety for…retirees is running out of money.”
