When the husband of a friend announced his plan to take early retirement, his wife worried that the new difference in their lifestyles would spill over into other aspects of their lives and affect how they related to each other. She was still working hard and planned to put in several more years before leaving the work force.
Running out of money wasn’t the issue. But when one spouse retires and the other continues to work, other interesting issues that connect the personal and the financial can arise. For example, how do the financial dynamics of the partnership change when one person works and the other doesn’t? How should the division of labor around the household change? In other words, how should a couple renegotiate these and other terms of their day-to-day lives? My advice is to talk through several issues before either partner makes this life-changing decision.
Income. For many, the question of what to do in retirement will take a back seat to the question of how to pay for it. My answer to that one is save, save, save; invest, invest, invest. If the retiring spouse will experience a significant drop in income, the couple might want to rethink how they bear this shared financial burden. The key in that case is to avoid a feeling of resentment by the working spouse, who might feel bitter about having to work while his or her partner enjoys a life of leisure.
Spending money. Spouses should be equal partners regardless of who makes more money. Retirees, along with stay-at-home moms or dads, shouldn’t feel impoverished by the fact that they’re not bringing home the bacon. Make things equitable by adopting one of these tactics. Each spouse contributes equal amounts to a joint account for household and shared expenses, then uses the leftover income for personal, discretionary spending. Or both spouses funnel all their income into a joint account and pay themselves an “allowance” each month for personal spending.
Household responsibilities. The retiring spouse, regardless of gender, has to be willing to step up and play a more active role in the management of the household.
Stay engaged. If you’re a retiree, find something to engage your energies, particularly if you’re retiring early and in good health. Retirements can last a long time today and you need to be prepared for what some people are calling the “second stage” of life. This could mean working part time or consulting in a former profession; volunteering or taking up a new activity, or even embarking on a second career. Don’t let inertia set in; you’ll be unhappy and so will your spouse.
Keep talking. In order to continue operating as a close couple, each partner needs to support the other emotionally. Communication and respect are the key to making this life transition successful.