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There are many financial decisions couples need to make as they retire. Here are five crucial ones to discuss with your partner to ensure a comfortable retirement.
1. Review your debt and credit scores
Before officially retiring, you may want to consider reviewing your total debts and credit scores. Debt and credit can impact a person’s ability to retire comfortably, so it’s important to take the time to review both before making any decisions.
There are a few things couples can do to improve their debt and credit score, but the top priority should be paying off any outstanding high-interest debt.
When you have less debt, it’s easier to manage your finances and avoid new debt. If you have high-interest debt, try to pay off that debt as quickly as possible to reduce your interest payments. Consider using debt consolidation for medical bills or other outstanding debts that can overwhelm your budget, especially once you retire.
You should also go over your and your spouse’s credit scores before officially retiring to ensure that there aren’t any mistakes or oversights you’ll need to worry about later on should you need to take out a loan or credit card.
One of the first decisions couples nearing retirement need to make is when to start taking Social Security benefits. The earliest you can start taking benefits is age 62, but your monthly benefits will be greater if you wait. If one spouse retires and the other still works, it’s important to plan how Social Security benefits will be utilized and when.
3. Decide on your retirement income strategy
When planning for retirement, many couples face the challenge of deciding how much income they will need to live comfortably. There are several factors to consider, including age, health, and lifestyle changes.
Some couples choose to retire early and rely entirely on their Social Security benefits. Others choose to wait until they are older and have more retirement savings. Regardless of the decision, you’ll need to have a plan in place so that both spouses are comfortable with the amount of income they feel is necessary. This can be a difficult conversation, but it’s vital to discuss your retirement goals so that you can make the best decisions for your family.
4. Decide on an estate planning strategy
When a couple is contemplating retirement, they may want to consider estate planning strategies. A couple can do a number of things to ensure that their assets will be distributed in a way that is comfortable and meets their individual needs. Some of the options include:
Each couple will have to decide what is best for them, but understanding the options and making decisions together can help to ensure a comfortable retirement and less stress down the line.
5. Review your health insurance options
As we age, our insurance needs change and our policies should be adjusted to ensure there’s enough coverage to feel protected. In the United States, many couples’ health insurance is tied to an employer, and if your coverage is through you or your spouse’s job, you might lose it when you or they are ready to retire. Luckily, thanks to the Affordable Care Act, there are now state-sponsored health insurance marketplaces with many states offering subsidies for low-income families like retired couples.
Each couple will have to decide what is best for them and their medical needs both now and in the future, but understanding the options and making decisions together can help ensure a comfortable retirement.
The bottom line
No matter your retirement plans, it’s always a good idea to consult with a financial advisor to help ensure that you’re making the best decisions for your family. These are just a few of the many important financial decisions couples need to make as they retire. By planning ahead, you can rest assured that you’ll have a comfortable retirement.