Wednesday, December 5, 2018

Big Age Difference Between Spouses Demands Extra Estate Planning Initiatives


“Sizable age gaps (between spouses) can create special challenges from a financial and retirement planning standpoint,Christine Benz points out in Morningstar. Why?
  1. They may need to plan for different retirement dates.
  2. They need to plan for different life expectancies, which affects portfolio withdrawal strategies and Social Security filings..
 When it comes to planning their retirement portfolio, Benz advises, “couples with big age gaps should craft their plans to accommodate the partner with the longest life expectancy.”  A big age differential would also mean the couple will need to be significantly more conservative with their initial withdrawal amount to ensure that their assets last throughout the younger spouse’s longer time horizon, she adds.

Separating assets:
There may be situations where each partner would want to separately manage and draw from their own pools of assets, Benz explains, which is particularly common if spouses each have children from previous marriages.

Converting the younger spouse’s IRA to a Roth:
When a spouse has a longer time horizon, that increases the likelihood that the long-term tax benefits of the Roth will offset the taxes paid on conversion.

Delaying Social Security filing:
If the older partner had the higher income over his/her lifetime, but the lifetime benefits for the surviving spouse.

Long-term care planning:
Long term care insurance is particularly important for spouses with a  big age difference. Single individuals can rely on Medicaid to shoulder their long term care costs if they exhaust their financial resources, Benz notes, but “long term care expenses for an older spouse can have disastrous effects for the financial well-being of the younger partner.”

Time planning:
If the older spouse retires, while the younger one keeps working, hard feelings can develop.  It’s important for the couple to set clear expectations for their new roles and for how their time – and their money – will be spent, Kerri Anne Renzulli points out in Financial Planning magazine.
https://www.financial-planning.com/news/retirement-planning-tips-for-couples-with-age-differences

Estate planning:
As estate planning and elder law attorneys at Geyer Law, we know the special challenges faced by couples with a big age gap. Working as a team with our clients’ tax, insurance, and financial planning advisors, we help couples contend with all those moving parts. And while one primary goal of estate planning is the protection and passing on of wealth, we take a lifetime planning approach, helping couples with a big age gap deal with all the moving parts of their combined situation.


 - by Rebecca W. Geyer

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