When One Partner Wants to Retire Before the Other

Most retirement planning tools assume you and your spouse will retire at the same time, on the same day, and sail off into the sunset together. But real life rarely works that way. Maybe one of you is burned out while the other loves their job. Perhaps there's a five-year age gap, or one partner's employer offers incredible health benefits you can't afford to lose yet.

Whatever the reason, staggered retirement is becoming the norm rather than the exception. According to research, nearly 60% of married couples don't retire within the same year. Yet figuring out how to make it work financially and emotionally? That's where most couples feel lost.

Let's start with what often becomes the deciding factor: health insurance. If you retire before 65, you're not eligible for Medicare yet. That gap can be expensive and anxiety-inducing.

Your main options:

• Stay on the working spouse's plan: Most employer plans allow you to keep your spouse covered. This is usually the most affordable option if available. Check if premiums increase when one spouse retires.
• COBRA continuation: Extends your employer coverage for up to 18 months, but you'll pay the full premium plus 2% administrative fee. Often costs $600-800 monthly for individual coverage.
• ACA Marketplace plans: Your income determines subsidies. Here's where it gets interesting: if only one spouse works, your household income is lower, potentially qualifying you for significant premium tax credits.
• Healthcare sharing ministries or short-term plans: Lower premiums but limited coverage. Read the fine print carefully.

A practical example: Let's say you want to retire at 62, but your spouse works until 65. If you can get on their employer plan, you've solved three years of coverage. Once they retire at 65, you both qualify for Medicare. That's a manageable transition.

But if their employer plan won't cover you, or they're self-employed, you're looking at roughly $1,800-2,500 monthly for marketplace coverage (before subsidies) until Medicare kicks in. That's $21,600-30,000 per year, a figure that can derail retirement plans fast.

When one partner retires before the other, your household financial picture becomes more complex. You're simultaneously living on retirement savings and still earning W-2 income. This creates both challenges and opportunities.

What happens to retirement contributions:

The working spouse can continue maxing out their 401(k), contributing $23,000 in 2024 ($30,500 if 50 or older). But here's what many couples don't realize: you can also fund a spousal IRA for the retired partner. As long as you file jointly and have earned income, the non-working spouse can contribute up to $7,000 ($8,000 if 50+) to their own IRA or Roth IRA.

This is huge. You're still building retirement savings for both of you, even though one has stopped working.

The tax planning opportunity:

Your marginal tax rate might actually decrease when one spouse retires, even though one still works. Let's say you were both earning $75,000 each ($150,000 household). Now one retires and draws $40,000 from retirement accounts while the other still earns $75,000. Your household income is $115,000, potentially dropping you into a lower tax bracket.

This is the perfect time to consider Roth conversions. Convert some traditional IRA money to Roth while you're in a lower bracket, before both of you retire and potentially face Required Minimum Distributions (RMDs) at 73 that push you back up.

Don't forget about Social Security:

If the partner who retires first starts taking Social Security before their Full Retirement Age (66-67 depending on birth year), their benefit is permanently reduced. Taking it at 62 means roughly 30% less than waiting until FRA. That affects not just them, but also the spousal benefit the other partner might claim later.

Here's a consideration: if the working spouse has the higher earning record, it might make sense for the retired spouse to delay Social Security even though they've stopped working. You can live on retirement savings and the working spouse's income, letting that Social Security benefit grow 8% per year until age 70.

The financial logistics are one thing. The emotional and lifestyle adjustment? That's where many couples struggle.

When one partner retires first, you're suddenly living on different schedules. One person is home all day with free time and new routines. The other is still dealing with morning commutes, work stress, and limited vacation days. Resentment can build on both sides.

Common friction points:

• The working spouse feels like they're funding the other's leisure time
• The retired spouse feels guilty spending money or planning activities without their partner
• Different energy levels, one returns from work exhausted while the other is energized from their day
• Household responsibility expectations shift ("You're home all day" is a dangerous phrase)

The couples who navigate this best treat it like any other major life transition: they talk about it explicitly. Before the first partner retires, have honest conversations about expectations, spending, household duties, and how you'll stay connected when your daily rhythms differ.

Some practical approaches that work:

• The retired spouse plans one special activity per week for when their partner is home
• Establish a "retirement budget" that the retired spouse can spend guilt-free on hobbies, travel, or activities
• Schedule regular check-ins during the transition period to address issues before they fester
• The working spouse commits to not dumping work stress on the retired partner, respect their new phase of life

The math changes when retirements are staggered. Instead of one "retirement date" to plan for, you've got two transitions to fund.

Phase 1 (One retired, one working):

Your spending typically doesn't drop as much as you'd expect. The retired spouse might actually spend more initially as they pursue postponed hobbies, travel, or home projects. Meanwhile, the working spouse still has commuting costs, work wardrobe, and potentially higher food expenses.

Budget for maybe 80-90% of your previous household spending during this phase, not the 70-80% that's often cited for retirement.

Phase 2 (Both retired):

This is when spending typically decreases more noticeably. Commuting costs gone, no work wardrobe, potentially more home cooking. But healthcare costs increase, especially if you're paying for Medicare supplements, Part D drug coverage, and out-of-pocket medical expenses.

Don't forget about taxes in your calculations. If one spouse draws from retirement accounts while the other receives a paycheck, you might be surprised by your tax bill. That Social Security income? Up to 85% of it can be taxable depending on your combined income.

A realistic example:

Miguel retires at 63 with $450,000 in his 401(k) and $2,000 monthly from a pension. His wife Carmen, 60, plans to work three more years. She earns $85,000 annually and has $380,000 in retirement savings.

During those three years, Miguel draws about $35,000 yearly from his 401(k) and pension combined. Carmen's salary covers their remaining expenses and lets them continue saving in her 401(k). When Carmen retires at 63, they'll have her $380,000 plus Miguel's remaining balance (now around $400,000 after withdrawals but with growth), giving them $780,000 combined. They delay Social Security until their Full Retirement Ages to maximize benefits.

By staggering their retirement, they actually strengthened their financial position. Carmen's continued earnings and contributions during Miguel's early retirement years made a significant difference.

Claiming Social Security too early: Just because you retire doesn't mean you should immediately file for Social Security. Every year you delay (up to age 70) increases your benefit. If your spouse is still working, consider waiting.

Forgetting about spousal benefits: Even if you never worked or had much lower earnings, you can claim up to 50% of your spouse's Social Security benefit at your Full Retirement Age. Don't leave this money on the table.

Withdrawing retirement funds inefficiently: When one spouse still has W-2 income, be strategic about which accounts you tap. Consider drawing from taxable accounts first, letting tax-advantaged accounts continue growing.

Underestimating healthcare costs: The gap years before Medicare are expensive. Factor in not just premiums but also higher deductibles and out-of-pocket maximums common in non-employer plans.

Not updating beneficiaries and estate plans: When life circumstances change, your estate planning documents should too. Review beneficiaries on all accounts, update your will, and consider powers of attorney.

There's no single right answer to staggered retirement. Some couples thrive with different schedules. Others find it creates tension. The key is honest communication and flexibility.

Maybe the working spouse negotiates part-time hours or remote work to ease the transition. Perhaps the retired spouse takes on a passion project or part-time gig that provides structure and purpose. Or you decide together that retiring simultaneously, even if it means working a bit longer or retiring with less, is worth it for your relationship.

What matters is that you're making these decisions together, with full awareness of the financial implications and emotional realities. Staggered retirement isn't a backup plan or something that just happens. Done intentionally, it can be a strategic advantage that strengthens both your finances and your relationship.

Important Disclaimer: The information provided here is for educational purposes only and should not be considered financial advice. Every couple's situation is unique, and the strategies discussed may not be appropriate for your circumstances. Before making any significant financial decisions about retirement timing, Social Security claiming strategies, or retirement account withdrawals, please consult with a qualified financial advisor, tax professional, or certified financial planner who can evaluate your specific situation.