How to Keep Client Couples' Simultaneous Retirements From Going Wrong

But advisors who have seen this play out say that emotional expectations often don't match reality. That's why they say thinking through how it will change their lives first is essential.

Loss of Identity

Jeff Judge, managing partner of Chesapeake Financial Planners in Forest Hill, Maryland, said he works with several dual-income couples in their late 50s, and the question "comes up more than most advisors would expect."

Judge said he had clients a few years ago, both in corporate roles, who retired the same week. At first, he said, they were thrilled.

"Six months in, one of them was quietly asking me whether it was too late to go back to work part time," he said. "The adjustment had nothing to do with money and everything to do with identity. That's a conversation I now start early, not after the papers are signed."

Steve Sexton, CEO of Sexton Advisory Group in Temecula, California, said he has seen this come up more over the past several years, especially with couples who are burned out at the same time or simply realize that they want to enjoy retirement while they're still healthy and active.

Sexton said one couple he worked with had done many things right, including strong retirement savings, low debt and good incomes. He said they initially were set on retiring together.

"But once we walked through the numbers in detail, it became clear that losing two incomes simultaneously would put a lot more pressure on their portfolio than they expected, especially with healthcare costs and inflation where they are today," he said.

The interesting part, said Sexton, was that the financial side wasn't the biggest hurdle. Emotionally, he said, one spouse was ready to stop working, while the other wasn't quite there yet.

"That's very common," he said. "Sometimes couples assume they should retire together because it sounds ideal, but the reality is people adjust to retirement very differently. They ended up staggering retirement by a couple of years, and honestly, it worked out beautifully. It gave them time to ease into the transition instead of going from 100 miles an hour to zero overnight."

How Simultaneous Retirements Change Planning

One issue that Sexton's clients are often surprised by is how different their tax situation can look once two paychecks disappear at the same time. In some cases, he said, their income drops enough to open the door for tax planning opportunities that weren't available during their peak earning years.

For example, Sexton said the years between retirement and required minimum distributions can be a great time to look at partial Roth conversions while income is temporarily lower.

"That can potentially reduce future tax burdens in retirement," he said.

Social Security planning matters, too, said Sexton, as many clients are tempted to claim as soon as they retire.

"But that decision can permanently reduce benefits," he said. "For couples, coordinating with each spouse's claims can make a meaningful difference over time."

Healthcare is another big piece of the puzzle, said Sexton.

"If both spouses retire before Medicare eligibility, private insurance can be expensive," he said. "I've seen couples underestimate that cost more than almost anything else."

Sexton said he encourages clients to build up a healthy cash reserve before retiring.

"Markets don't move in straight lines, and if both incomes stop during a rough market period, you don't want to be forced to sell investments at the wrong time just to cover living expenses," he said.

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