The decision to retire is a big one, and there are various factors that are apt to play into it. But what happens if you're ready to pull the trigger, and your spouse isn't? While there's no rule stating that you and your spouse must leave the workforce simultaneously, you'll need to consider the ramifications (both good and bad) of retiring at separate points in time. Here are some key points to keep in mind.
1. You might need to adjust your budget
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Just as you'll need to rethink your budget once you and your spouse are fully retired, so too must you reexamine your finances if one of you decides to stop working. Losing a salary will most likely impact the amount you can afford to spend, so take a close look at your expenses and make sure you can keep up on a single salary, or one salary plus Social Security. If not, make adjustments early on, because the last thing you want to do is rack up debt later in life.
2. It might make sense for you to file for Social Security right away
Retiring at a separate time from your spouse gives you a real chance to be strategic about how you claim Social Security. Assuming you're at least 62 when you retire first, you have the option to start taking benefits immediately to generate some income while leaving your spouse's benefits to grow. This can be a smart choice if you're the lower-earning spouse. Of course, you will need to keep in mind that if you claim benefits before reaching full retirement age, which, depending on your year of birth, is 66, 67, or somewhere in between, you'll lose a portion of the full benefit amount you otherwise would've been entitled to. Still, it's a good way to compensate for your loss of income without having to make too many lifestyle sacrifices.
3. You'll need to figure out your health insurance
Retiring ahead of your spouse may not hurt you from a health insurance perspective, because even if you're not yet eligible for Medicare, you may have the option to get on his or her employer's plan, thus saving yourself the cost of covering that expense in full. Even if you are eligible for Medicare (which happens once you turn 65), if your spouse's health plan premium is reasonable, it might make sense to keep paying it for better coverage. And as long as you're covered under that plan, you won't be penalized for not signing up for Medicare right away.
4. You might get lonely or bored
Maybe you have a number of friends or neighbors who are already retired, and you're eager to experience that leisurely lifestyle together. But if that's not the case, and you retire ahead of your spouse, you run the risk of getting bored and lonely early on. And that, in turn, could negatively impact your health. It's said that retirement increases the likelihood of suffering from clinical depression by 40%, and if you're going at it solo, you might further raise this risk. Therefore, if you're going to be the first one to leave the workforce, have a plan for what you'll do with your free time. You might take classes, volunteer, or even start your own business. Just make sure you have something fulfilling to look forward to.
There are plenty of good reasons to retire years before your spouse does the same. Maybe your health is starting to fail, and you're tired of struggling to keep up with your job's demands. Or maybe the opposite is true -- your health is great, and you want to enjoy retirement while you have the energy to do so. If you're ready to retire and your spouse isn't, by all means, go for it. Just be sure to consider the ramifications before taking the leap.
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