When Boomers Face Separate Retirements: Dos and Don’ts

When one spouse retires, willingly or not, many couples have to live different lives and face changes in their financial, social and emotional circumstances

Advisors can help couples visualize retirement by using an income timeline. Advisors can help couples visualize retirement by using an income timeline.

Susan Gordon was in her mid-50s when she lost her high-powered job at an investment bank in New York City. She went on several interviews at other banks but received no offers, explaining that she felt her age worked against her.

Gordon's husband John is COO of an asset management company based in Jersey City, New Jersey, where the couple has an apartment.

Eventually, she decided to retire and spend more time at their condominium in Newport, Rhode Island, where she had grown up and still had family, and volunteer in the community.

The Gordons now spend most weekends in Newport while Susan travels back and forth between their two homes. 

With more and more baby boomers retiring each year, either by choice or because they lost their jobs in the economic downturn, many couples like the Gordons have to coexist while living different lives, at least temporarily, and face changes in their financial, social and emotional circumstances.

"The first thing is, it's a good idea to revisit how to handle their cash flow and spending. It depends on the dynamics of the couple, and if they didn't make the decision in haste or were not forced into it, it is easier," Susan Zimmerman, a consultant at Mindful Asset Planning in Apple Vally, Minn., told BenefitsPro.  "Since the picture has changed, they made need to adjust their spending or shift it around a bit."

Zimmerman's new book, Mindful Money for Wealth and Well-Being: Help Clients Strike a Balance in Financial Planning, was published earlier this year.

She said most couples will have to deal with what she calls the "fear factor." There is a big mental shift when there are not two paychecks coming in from the work you're both doing," Zimmerman explained.

"Don't go in guessing. Have some analysis of how quickly the money will be depleted and whether it will last long enough to can help you with adjustment to spending. What are the compromises we need so we don't have to literally fear running out of money. "

Money was indeed a fear at first, Gordon said.  "We had to adjust to not having a second income.  We asked ourselves questions about what things we will do differently, what things will we not do at all, and what things will remain the same," she said.

One thing high up on the checklist was deciding what to do about a condominium on Siesta Key, Fla.  Although they were able to rent it out during the peak season, there were taxes and other associated costs. In the end, they decided to sell it.

Gordon said she also had to get used to thinking more about "our money" and "his money."  "When I stopped working but still spent at times I felt guilty about it. That's been a tough one to get over."

James Bungee, a financial planner in New York, said he helps couples visualize retirement by using an income timeline. It shows exactly when certain sources of income, such as one spouse's salary, will stop and when others, like Social Security or a pension, will start.

The couple then needs to figure out a map for their living expenses. They need to go through the exercise of estimating "absolutely necessary" expenses, those where there is "some leeway," such as eating out or eating at home, and "completely discretionary" ones like travel, Bungee said.

Any gap between the income timeline and the expenses that is left will show how much needs to be tapped from a retirement plan like an IRA or what changes they need to make to live on one salary.

"It’s a math problem," he said. In some cases, noting that learning to live on one salary can be enough to solve it.

"Once couples know their finances are in order, they often find it much easier for one to retire earlier than another."

Zimmerman pointed out that aside from finances, couples retiring separately should plan for fun. "It makes sense to have an idea ahead of time how they'll allocate time for recreation and entertainment, all those things that would be considered social or just life's pleasures," she said.

"Usually it's worth talking about what's fun for both and what's fun for only one or the other."

That is just part of the overall retirement routine. "You have to get used to managing the daily calendars and household duties and errands," said Gordon. "The working spouse assumes the non-working spouse will do all of it because they have the time, whereas it used to be shared."

The non-working spouse also has to make sure to have activities to stimulate the mind. In addition to volunteering, Gordon also took some classes at a nearby college and has started earning her real estate license.

On the flip side, there can be envy on the part of the working spouse. "I feel bad when John calls and asks what I'm doing and I say reading a book or getting my nails done. He says, 'I want your life!'"

Finally, Zimmerman said both spouses have to be aware of the emotional side of retiring because the one who is leaving the workforce will feel differently.

"It can be simply to have a conversation about what each person finds meaningful in life. What helps them feel their life gives them meaning and purpose, especially given that most retirees are older, and if they're not doing something, that makes them feel useful and appreciated, they could start to feel empty. It doesn't have to be heavy and grueling, but a nice set of questions to discuss as friends."

Disagreeing about the various aspects of retiring separately should not be seen as a negative, she added.

"I often remind people that disagreeing and having varying opinions on how things can be isn't a problem in and of itself.  It just necessitates more discussions."

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Check out Why Retirement Planning Is Not for the Passive on ThinkAdvisor.

Originally published on BenefitsPro. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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