When you marry later in life, there are financial considerations to take into account. Keep reading to learn more about what you need to think about before tying the knot after retirement.
Crunch the numbers.
Crunching the numbers is an important consideration when marrying after retirement. First, you’ll need to estimate how much your new spouse will contribute to or add to your monthly expenses. If they’re retired as well, their budget may be similar to yours, but if they’re still working, their spending may be substantially different. Additionally, don’t forget about potential changes in Social Security and Medicare benefits once you’re married.
Another thing to think about is how your retirement savings will be affected if you get married. Before making the decision to get married, use a fixed term annuity calculator to help you figure out how your retirement income will be affected. Most pensions and 401(k)s are based on individual contributions, so if you and your spouse combine them, they may not be as large as they would have been if they remained separate. This could impact your ability to live comfortably in retirement.
Also, keep in mind that Social Security benefits may be reduced if your new husband or wife earns more than a certain amount. This is a crucial factor to consider before rushing out to buy those wedding bands.
Additionally, if one of you has significantly more saved than the other, there may be some tax implications for transferring those funds into a joint account. One of the spouses could end up being taxed at a higher rate on that money than they would have been had it stayed in their own account. So be sure to consult with a financial planner who can help weigh all the pros and cons of combing your finances.
Take a look at your estate plan.
When planning your estate, you should take into account how your assets will be divided if you die while you are still married. If you have a prenuptial agreement in place, your assets will likely be distributed according to its terms; however, if you do not have a prenuptial agreement and die while married, state law will dictate how your assets are divided.
In most states, the surviving spouse is automatically entitled to a certain percentage of the deceased spouse’s estate – typically one-third or one-half of the total estate. If you want to ensure that your spouse inherits less than this automatic share or no part of your estate at all, you will need to take specific steps in your estate plan.
Through proper estate planning, it is possible to give designated items or amounts of money directly to the surviving partner rather than let them inherit through state law which may not reflect what was originally intended. Keep in mind, though, that whatever is put into place should still provide for dependents and loved ones left behind should something happen to you prematurely.
Another financial consideration is how retirement savings will be divided between spouses. Often, retirees have different levels of savings depending on when they retire. If one spouse is significantly better off financially than the other, it may be necessary to create a plan for dividing assets fairly. This can include taking into account who contributed more money to retirement savings accounts during the course of the relationship, as well as considering the future income needs of each spouse.
Make sure your spouse will have enough money after you pass away.
Another important factor is whether your spouse will have enough income to live on if you die first. If not, you may need to purchase a life insurance policy to ensure they are taken care of financially. Either that, or you’ll need to make sure you have enough saved up to cover both your expenses and those of your spouse should something happen to either one of you.
Ultimately, there are many things to think about when marrying after retirement, and it’s important to discuss all potential implications with your partner before making any decisions. By being open and honest about finances, couples can make sure they’re ready for whatever comes their way during this new stage of life together!