When there’s an age gap between spouses, retirement planning often gets more complex. Different timelines can lead to gaps in health insurance, uneven income years, and tax issues that catch many couples off guard. Lifestyle mismatches, such as one spouse retiring while the other keeps working, are also common in second marriages or dual-career households.
If your timelines don’t match, your plan shouldn’t either. Without coordination, it’s easy to overlook opportunities or face surprises you didn’t plan for. Federal retirement planning for couples with an age gap requires a coordinated strategy to address differences in benefits, timing, and long-term goals. Here are a few key factors to consider.
Medicare and Health Insurance Timing
Since Medicare eligibility begins at age 65, the younger spouse may face a health insurance coverage gap if they were relying on the older spouse’s plan. In this case, common options include:
- Federal Employees Health Benefits (FEHB) continuation
- Spousal coverage
- COBRA options
Coordinating coverage enrollment dates and understanding how coverage shifts between Medicare and FEHB can help couples avoid penalties or gaps in care.
Social Security Income Strategies
Significantly different Social Security eligibility dates may create planning opportunities. For example, one spouse may choose to claim benefits early (possibly as a spousal benefit) while the other delays until age 70 to lock in the maximum monthly payment. This “split strategy” may increase total lifetime benefits, especially if the older spouse is the higher earner.
When weighing potential start dates, be sure to consider overall income needs, survivor benefits, tax impact, and how Social Security fits with other retirement income sources. The right timing strategy should support both spouses in both the short and long term.
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Required Minimum Distributions
If your spouse is at least 10 years younger and your sole beneficiary, you can use a more favorable IRS table to calculate Required Minimum Distributions (RMDs) on traditional retirement accounts, such as an IRA, 401(k), or 403(b). This results in smaller withdrawals and lower taxable income.
It’s important to note that the Thrift Savings Plan (TSP) does not offer this exception. However, some feds find it beneficial to roll their TSP to an IRA before RMDs begin so they can take advantage of this rule.
Withdrawal Strategies To Consider for Two
For couples with age gaps, carefully coordinating retirement withdrawals may help balance income, mitigate taxes, and may help extend the life of your retirement savings. Here are a few common strategies that may create more flexibility and tax efficiency:
- Stagger withdrawals across Traditional and Roth accounts: This helps manage taxable income over time, especially if one spouse is in a lower bracket while the other still has earned income or larger distributions.
- Delay Social Security for the older spouse: Waiting until age 70 increases monthly benefits and can provide a higher survivor benefit for the younger spouse down the road.
- Use Roth conversions strategically: Consider Roth conversions in low-income years, such as between retirement and when RMDs begin.This may help to lower lifetime taxes and create future tax-free income.
Retire Smart, Even if You’re Not Retiring Together
There’s no perfect formula for couples with different retirement timelines, but proactive planning can make all the difference. A CERTIFIED FINANCIAL PLANNER™ professional can help you weigh your options, avoid costly missteps, and build a strategy that supports both spouses.
Need help getting started? Reach out to the team at Serving Those Who Serve at [email protected] to schedule a personal appointment.
RMD’s are generally subject to federal income tax and may be subject to state taxes. Consult your tax advisor to assess your situation. Unless certain criteria are met, Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. Additionally, each converted amount may be subject to its own five-year holding period. Converting a traditional RA into a Roth IRA has tax implications. Investors should consult a tax advisor before deciding to do a conversion.
The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Serving Those Who Serve writers and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. **
