Dear MarketWatch,
I am 54 and my husband is 68. He was previously married and has two children from that relationship. We have a 14 year old child together. I have a fair amount of money saved: $1.5 million in retirement accounts, $1.1 million in an individual investor account, and I own $1.6 million in real estate.
My husband is the spender, not the saver, and he doesn’t have much retirement savings ($157,000 in an IRA and $200,000 in an annuity).
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He started collecting Social Security at age 66 ½, and brings in about $75,000 a year between his part-time work and Social Security. He previously owned an e-commerce business, which he is now closing. He is on Medicare and is fit and healthy.
I just took on a new role at our local city and have cut my salary in half, but I’m enjoying the stability and benefits. I make $82,500 and plan to stay with the city until I’m 60 or 62 to get a reduced pension of about $900 or $1,000 a month.
Since we have a fourteen year age difference, he wants me to retire early so we can travel and explore (which I would also like to do), but I don’t want to leave the retirement money on the table and I need healthcare benefits. We have just over $100,000 in a 529 plan for our son and if necessary we would use additional savings to cover more of his education.
We have no debt or mortgage on our house. About $3 million in the bank/brokerage should be enough to retire early, but I’m concerned because my husband doesn’t have enough money for retirement and he can’t or won’t tap into my savings.
I live well below my means and will continue to do so, but once our child is in college, I want to travel more and be healthy enough to enjoy it.
The saver
Related: We have $4,000 a month in retirement income – and want to put $200,000 into an annuity. Is this a wise decision?
Dear saver,
I understand the fear, even if you already have a significant amount of money stashed away for the future.
Planning for retirement, especially early retirement, can be nerve-wracking. You shift to a mindset of spending everything you’ve worked for. You do have to consider additional layers, such as health care and your child’s education. There’s also the fact that you and your husband approach money differently, and that can weigh heavily on everyone (even if it could work out just fine).
Spouses don’t have to have the same approach to money – many don’t! There are so many reasons for this, such as the relationship people have with money growing up, their salaries and working conditions, and so on. But your guy is your teammate, and all teammates have their own strengths and weaknesses. Talk to him about what they are and how you can maximize what you are both good at.
For example, it seems that you are very good at saving. Wanting to keep working to take advantage of those retirement benefits later isn’t a bad idea, and it won’t be for another six years at the earliest. Your 60th birthday also falls around the time your child goes to college, so your desire to travel more could very well coincide with your eventual retirement, and you’ll have the opportunity to save more money along the way.
If you retire at age 60 or 62, you will still have to pay for health care until age 65 to qualify for Medicare, but at least that would be shorter than if you retired now. Private health insurance can be expensive depending on the level you choose and where you live, but if you include it in your retirement plans and budgets, you’ll be ahead of the curve. Given your current wealth, it appears you are in a good position for retirement.
Current and future expenses
Get on the same financial page as your husband (and vice versa). Talk about both your spending habits – not just his – and see if there’s anything you could both do better. Approaching the subject in this way can ease any tension, and he won’t feel like he’s being attacked. Also consider ongoing expenses, including your child and stepchildren. Children – and yes, sometimes grandchildren – can be expensive.
Provide some protection. Set up powers of attorney and health care proxies in the event that one or both of you becomes incapacitated. Check or name beneficiaries on accounts that allow this so that those assets don’t have to go through probate. Consider life insurance or a trust that will take care of the people left behind if either of you die. A financial planner or real estate attorney can help you with this. Make a will and make sure all your wills are clear.
Look for provisions that protect extravagant spenders. Spending trusts or trusts will hold the assets and distribute them according to the wishes of the benefactor, so that the beneficiary cannot immediately spend them, or creditors can seize the money. You can also ensure that the provision states that the inheritance may only be used for certain expenses, such as healthcare costs and education. This doesn’t all happen in one day or one conversation.
Retiring early is great, but 60 is still quite early to retire. Your husband is older and he wants to spend time with you, and that’s a beautiful thing. When reviewing your finances as a couple, you can build vacation plans into your monthly and annual budget. Do you have any new hobbies you would like to try? And remember: you don’t have to wait until retirement to enjoy your life to the fullest.
