Broker Check
Financial Planning for a Couple’s Age Gap

Financial Planning for a Couple’s Age Gap

September 07, 2022

Couples usually don’t retire at the same time when they have an ‘age gap’ between them. An age gap relationship is one where there is eleven or more year’s age difference between them. Age-gap relationships are becoming more common as people choose to marry later in life, remarry or start a life-partnership with someone significantly younger.

According to the latest study from the National Center for Health Studies (2017 statistics), the average woman is living 81.1 years compared to 74 years in 1960; the average man lives 76.1 years compared to 67 years in 1960. The increase in life expectancy helps to change the age differences in many couples, making financial planning even more critical.

In age-gap relationships, one partner continues to work for a decade or longer than the other. The drawing of retirement assets and social security income earlier for one partner, coupled with differing longevity factors, presents a planning challenge compared to other couples.

Age-gap couples may have up to a half-generation between their ages and consider planning for two different scenarios to reflect their age differences. These couples shouldn’t rely on a financial plan based only on the older partner’s financial information and longevity factors. Some things to consider for these couples:

The older partner may want to delay taking Social Security benefits until their full retirement age unless they have health issues. Delaying the more senior member's benefits will benefit both if the older partner was the higher income earner.

Health insurance coverage will be impacted if the older partner carried the health insurance and goes on Medicare, requiring the younger one to find new insurance.

Basing the partner's financial plan with the longer life expectancy will help the combined portfolio last over a longer time horizon. Both expected retirement dates should be included even if they are a decade or more apart.

Considering the tax consequences for drawing down retirement assets at two different starting dates is essential. With one partner continuing to work, they should maximize their pre-tax retirement account contributions to offset moving the couple into a higher income tax bracket. Most retirees have a higher income tax consequence the first few years of their retirement.

Utilizing an annuity for one or both partners can help offset the couple's retirement portfolio's longevity risks. Annuities provide a stream of income the owner can't outlive and can offer lifetime assets to the other partner, depending on the type of annuity and its features.

Suppose you're in an age-gap relationship and need guidance to plan for your retirement. In that case, your financial professional can provide you with information to utilize annuities or life insurance for your unique situation.





Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

Fixed and Variable annuities are suitable for long-term investing, such as retirement investing. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply. Variable annuities are subject to market risk and may lose value.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

LPL Tracking # 1-05134889