How Financial Planning Changes When There’s an Age Difference

Planning your finances is never really simple. But when one spouse is many years younger than the other, there is often even more to consider. For example, instead of planning a typical retirement income stream of 30 years, it’s going to be more like 40, maybe even 50 years. Financial planning when there’s an age difference can be a bit more complicated.

If there's an age difference between you and your sweetheart...10 years, 15 years, 20 years or can affect your finances. Financial planning when there's an age difference has some important distinctions of which you should be aware.

For me and my wife Suzanne, this is that situation. I am currently 68 and she is just 47. To be honest, it didn’t really dawn on me as to what might make it very different when we are 20+ years apart in planning retirement life until just a few years ago. Having met her when I was working and just in my mid 50’s, I thought retirement was far off in the distance and never dreamed that I would “have” to retire early because of my health and that she would become disabled for health reasons too. That’s made me ask the question: “What do we do differently to deal with our finances when one spouse is so much younger than the other?”

First Things First

Since we both effectively stopped working full time almost 10 years ago, we have had to be super resourceful in planning our everyday expenses and seeking as many creative and unusual ways of earning extra money. I have written extensively about our budgeting and side hustles and how it has made us able to not only survive but actually have a life that is fun, fulfilling, and working well. Initially, I wasn’t so sure, but the experience has shown me that the idea of fiscal responsibility, education, and practice works. It’s the main reason I am writing this blog and am hopeful that no matter what the situation is, people of any age and any situation will practice good financial habits and perhaps our experience will guide them.

Planning for Retirement

The most common mistake when a couple’s ages are significant years apart is not being prepared for a very long retirement. It’s natural to want to retire and spend time together when an older spouse retires, but that means the younger spouse (often the woman with a longer life expectancy to begin with) could be living in retirement for 40 or more years. That is a very long time to live just on savings, especially if some of the couple’s wealth is held in reserve for others (like favored charities, children from a prior marriage, etc.). Frequently it’s advised that the older of the two consider working longer; perhaps retiring at 70 instead of 65 in order to better fund the future living expenses of the survivor. That didn’t work so well for us.

In addition, retirement income sources like pensions and annuity payments will be more spread out (the same amount will be paid over a longer time, resulting in lower monthly income) when joint and survivor options are chosen. It’s critical to select payment of these retirement sources over both lives, not just the older one of the couple, in order to maintain the standard of living of the survivor.

Special Rules About RMD’s That You May Never Have Heard About

As you may already know, when you reach the age of 70½, you have to take a Required Minimum Distribution (RMD) from qualified retirement plans. If your spouse is your sole beneficiary and is more than 10 years younger than you, you may use the Joint Life Expectancy Table to calculate your RMD instead of the Uniform Lifetime Table. Using the Joint Life Expectancy Table will result in a smaller RMD than using the Uniform Lifetime Table and stretch you savings further. Of course, it will also reduce your payout each year and that must be workable or other problems will develop.

You will take the ages you and your spouse will be at year’s end when you reach the year that one becomes age 70½ and use the Joint Life Expectancy Table to determine the life expectancy factor. Then you divide that into your previous year-end retirement fund balances and this calculation will give you your RMD amount.

You may only use the Joint Life Expectancy Table if your spouse beneficiary is more than 10 years younger than you. If you have more than one primary beneficiary listed on your IRA, you must use the Uniform Table and not the Joint Life Expectancy Table. Contingent beneficiaries don’t matter. If you have multiple primary beneficiaries, you must use the Uniform Lifetime Table.

Other Things to Know About Your RMD

If you change beneficiaries during the year, you may not use the Joint Life Expectancy Table but you may be able to use the Joint Life Expectancy Table if a trust is the beneficiary of your IRA and your spouse, who is more than 10 years younger than you, is the sole beneficiary of the trust. Certain requirements must be met. Check with your tax advisor to see if your trust qualifies.

Your IRA custodian is not required to report your RMD amount to you using the Joint Life Expectancy Table. The custodian is permitted to use the Uniform Lifetime Table for all reporting of RMDs to IRA owner, so be aware that an amount reported to you may be more than the actual required RMD.

Delaying Social Security is Critical

Most people jump at the opportunity to begin Social Security payments as soon as they are available. However, with a significantly younger spouse who may be receiving survivor benefits for 40 years or more, the longer you can delay taking your Social Security payments, the better off the survivor will be. Waiting until age 70 to start Social Security will significantly increase your joint retirement income and the spouse’s survivor benefits for the rest of your (and your spouse’s) life.

I would have done so if I were still able to work full time outside the home.

Planning Your Kids’ and Grandkids’ Education

With a later marriage sometimes come later education expenses. It wasn’t an issue for us, but it sometimes can be one for others. This often means that instead of building up savings in your late 50’s, you’ve only just started to write the really big checks for your kids. Saving early is an option, but for most people planning to work longer may be much more realistic.

Estate Planning can be Much More Complicated

Estate planning is rarely simple, but when a couple with a significant age difference is planning for the management of their estate, some additional complications can be introduced. For example, there may be children from a prior marriage. Often the parent of these children will want to ensure that their “share” of any inheritance is protected. Frequently, assets accumulated before or even during a second marriage may not pass directly to a survivor, but may have some significant strings attached. With a much older spouse, incapacity planning and the management of retirement accounts also take on greater urgency.

Healthcare Costs are Often Bigger, Sooner, and Longer

When the older spouse turns 65 and starts Medicare, you will be paying out-of-pocket for private supplemental (or advantage) insurance that is generally more expensive than employer-provided benefits. Couples who are of similar age can downsize, move together into retirement communities or assisted living later in life and share some of that cost. This may not be an attractive option for a much younger spouse, so it may mean in-home healthcare may become necessary. Another (more expensive) option is for one spouse to be in a nursing facility while the other maintains the original home. You have to consider all of these alternatives no matter what your current situation is right now. There are never any guarantees when it comes to your health. That’s why planning ahead and being financially responsible is so important.

These are just some of the things you will need to consider when you choose an older (or younger) spouse. There is more here to discuss and in some future post I will do just that. Here’s hoping that you are looking at all of your possible outcomes and circumstances before they arrive at your doorstep.

Are you in a similar situation as my wife and me? Do you have family members or friends who may be? Do you understand RMD’s and how it can affect the distribution of your retirement savings? These and so many other questions may seem like something you can deal with long down the road but the truth is that the sooner you consider them the more peace of mind you can secure. What do you think?


  1. Prudence Debtfree

    Wow. For us, there is only a difference of 4 years, so I had never thought of this before. I’m very sorry that both you and your wife have had to stop work because of struggles with your health. That is one of those situations no one expects to have to deal with. It’s so great that you’re making it all work out. Here’s wishing you both the best of health – both physical and financial.

    1. Thank you, Ruth, for your good wishes. Suzanne and I are realists, but at the same time, we know that we have a lot of input into how to make things work and don’t spend a lot of time feeling sorry for ourselves. It’s often said that your health is the most important thing in life, and now that I’ve gotten to this point, I’d have to agree. As long as we continue on the financial road we’re on, we should be okay.

  2. I’m so glad that you shared this perspective! Since my husband and I are only two years apart, I hadn’t given it much thought lately. I say lately because in Illinois, there was a massive pension reform that changed the year of retirement by about 10 years! Since I started teaching two years before my husband, for a while, it looked like we would be on wildly different paths. Thankfully, he was able to get full time work right before the cut off went into place!

  3. I never though of this difference. I only have a difference of 5 years with my fiancee but this could still make a difference. It’s better to plan for our retirement with maximum expectancy of both parts. In my case, I should plan for five more years than I thought. Delaying social security seems like a great idea. Thanks for sharing your story Gary!

    1. You’re very welcome, TPS. The act of postponing Social Security does make a whole lot of financial sense because it will dramatically increase your payout here in the US. I’m curious how it works for you in Switzerland. The only monkey wrench in any of this is whether you can manage your health so that working past full retirement age is a real option.

  4. This is indeed a fresh perspective on financial planning. Age can be a big changer when it comes to planning for finances. Money isn’t the most romantic conversation that couples will have but this should happen before they retire. If not then they might fight about money or end up with nothing in retirement.

    It is important for married couples to talk about money and to be on the same page so it will be easier for them to visualize the same things about their future. There are instances wherein a spouse wants to continue working after retirement so it’s best to discuss this, what might change and what would be the effect of these changes to their budget.

    Also, it’s not unusual that couples will have different expectations and preferred retirement lifestyle. Instead of assuming what their partners prefer, they should sit down, have a talk and have a clear conversation about their retirement lifestyle. After that, they can finally map out their finances and what their monthly expenses would be.

    1. That’s a great summary, Samantha. I’ve always felt that talking finances really starts when your relationship is first serious enough to consider the long term possibilities. An honest discussion is essential all through your relationship, and so when it comes to retirement, it’s just a natural progression to continue that conversation. I’m sure that there are surprises about lifestyle preferences when you’re a senior and the earlier the discussion starts, the easier any adjustments will be. Thanks for your comments.

  5. I had no idea there were so many financial implications to picking a partner with a big age gap. I can imagine moving into a retirement community in your 40s or even early 50s might not be so appealing to a younger spouse – it’s great that you consider both sides.

  6. My husband is five years older than I am, and just a few years away from retirement. However, we also have a teenaged daughter who is now in Catholic school ($10,000/year) and who will hopefully be in college thereafter (and she’s a good enough but not great student so big dollar scholarships aren’t in her future). I get that my husband is tired of working but it doesn’t seem fair that he gets to quit and I don’t. However, I think tuition bills need to be in the past before we quit.

    1. There are a lot of variables when it comes to making a decision such as when you should retire. Having a child in school can certainly extend work life if you’re going to be looking at big dollars, and in most cases, that’s the situation. It’s good to discuss it with your husband to make sure you’re on the same page and things go smoothly until you can both become part of the retirement club. I appreciate you sharing your personal story.

  7. Hello Gary

    This is an excellent post! Most advice on the internet assumes the that the husband was the higher wage earning, there is a small age difference and husband has a shorter life expectancy. We see more and more cases where there’s an age difference; the wife may be the older spouse and maybe the higher wage earner.

    I bought some old pamphlets on social security from the 50’s and 60’s on eBay. I thought they would be neat to put on display in my office. I have been reading them, and they are kind of hilarious. Planning has changed so much!

    1. I appreciate those kind words, Michael. Those pamphlets must be quite interesting! I imagine there are several factors that have caused those changes since the 50’s and one certainly is life expectancy. I try to write from personal experience and hopefully my own situation would be of interest to anyone in a similar circumstance. Thanks for stopping by!

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