It's Your Money  

Age-gap retirement

It was once a given that spouses would retire at around the same time. Couples would then set off for months of travel or could at least spend more time together.

Having two people retire at the same time also simplified financial planning – professional planners could factor in two pensions, tax plan around the withdrawals of two RRSPs and more.

Now, though, many people are marrying spouses who are much younger than them. One might be nearly ready for retirement while the other still has one or two decades to go – and this can complicate a couple’s financial picture. There are so many more things to consider.

For instance, figuring out how much to save for their respective retirements becomes more complicated. And if they choose to stop working at the same time, they will need a considerable nest egg to fund the younger spouses’ golden years. If one spouse keeps working, the one who retires may not need to withdraw as much from their RRSP or RRIF for the first few years.

Children from previous marriages can also add complications to one’s retirement. If you don’t use all your savings and want your children to have the rest, then you may need to do some more intensive estate planning to ensure you’re not disinheriting your children by leaving your assets to your younger spouse.

Those are just a couple examples of retirement planning dilemmas facing couples with significant age gaps, but there are others. Some couples may also end up providing support and caregiving for elderly parents and the couple may need to do the same for they younger spouse’s parents in the years to come at a different stage of their own retirement.

As well, they younger spouse may be required to provide support and care for an aging spouse down the road. So with that in mind, do you reduce spending in the earlier retirement years and forgo things like travel while both partners are still able to so that you have enough saved for later years care? Or do you travel now and enjoy life while the opportunity still exists?

Coming up with a plan involves being honest with your partner. That’s always true, but it’s especially important when couples are different ages. Talk about how one will spend retirement while the other works, if the younger spouse would consider cutting back – or maybe the older one works a little longer so they can enjoy retirement together.

Each couple must look at their specific situation and decide on a life plan that works for them. And be supported by a financial plan that will get them where they want to go – together.

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About the Author

Brett, designated as a chartered investment manager and certified financial planner, is the regional director (Okanagan) for IG Wealth Management.

In addition to his “day job," Brett was appointed to the board of directors of FP Canada (formerly FPSC) in 2014, named as the board’s vice-chair in 2017 and took over as board chairman in 2019. 

Brett has been writing a weekly financial planning column since 2012 and provides his readers with easy to understand explanations of the complex financial challenges that they face in every stage of life.

Enhancing the financial literacy of Canadian consumers is a top priority of Brett’s and his ongoing efforts as a finance writer and on the regulatory side through the FP Canada board focus on this initiative.   

Please let Brett know if you have any topics that you’d like him to cover in future columns by emailing him at [email protected]

The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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