Legal   |   ADV   |   Privacy   |   CRS

Retirement Planning Strategies When There is a Sizable Age Gap

age gap

Most married couples tend to be relatively close to each other in age. According to the most recent U.S. census data, the average age gap between married couples is 2.3 years. However, in 10 percent of marriages, the age gap is more than 10 years.

Unique Planning Challenges

A sizeable age gap between spouses can create unique financial and retirement planning challenges for married couples. Specifically, these couples may need to plan for a much longer retirement than couples who are closer together in age because the younger spouse may live in retirement for many years.

This is especially true if the younger spouse is a woman, since women live longer than men, on average. According to the Social Security Administration’s U.S. life expectancy calculator, a woman who is 45 today will live to age 88, on average, or 21 years after reaching the full retirement age of 67. However, a man who is 50 today will live to age 85, on average, or 18 years after reaching full retirement age.

This couple might need to plan on drawing from their retirement savings from the time he turns 67 until the time she turns 88. This would be a 26-year retirement, compared to a 21-year retirement for spouses who are the same age. If there were a 10-year age gap — for example, if she was 40 and he was 50 — this retirement window would stretch to 31 years.

Make Plans Based on Younger Spouse

To be safe, Frontier recommends that mixed-age couples should plan their retirement finances based on the younger spouse’s life expectancy in order make it less likely that the younger spouse will outlive their retirement nest egg. This could impact not only how much money couples should plan on saving for retirement, but also their asset allocation strategies and portfolio withdrawal rates.

For example, many couples start to shift their asset allocation mix away from risker assets like equities toward safer assets like cash equivalents and fixed-income instruments as they near and enter retirement. But mixed-age couples may need to maintain higher equity allocations for longer in order to generate enough potential growth to support the younger spouse’s anticipated longer lifespan.

Meanwhile, mixed-age couples may need to be more conservative when it comes to drawing down their portfolio, especially during the early years of retirement. A couple planning for a 21-year retirement, for example, can generally afford to withdraw more money each month than a couple planning for a 26-year or 31-year retirement and not risk depleting their retirement account before they both die.

Timing of Retirements

Another big factor that Frontier acknowledges regarding retirement planning for mixed-age couples is when each of them plans to retire. If both spouses want to retire at the same time, the couple will lose out on years of additional income and potential retirement plan contributions by the younger spouse. The younger spouse’s Social Security benefits might also be reduced.

One solution that we have recognized is for both spouses to continue working until the younger spouse has reached full retirement age. This would maximize Social Security benefits for both spouses while enabling the couple to continue earning income to meet their household expenses for a longer period of time, thus helping preserve their retirement funds. It would also enable them to keep building their retirement accounts for longer through ongoing contributions by each of them.

Watch Out for RMDs

Required minimum distributions (RMDs) are another important factor mixed-age couples need to think about when planning retirement strategies. In general, you must begin taking distributions from qualified retirement accounts like traditional IRAs and 401(k)s when you reach age 70½.

However, if one spouse is the primary beneficiary of the other spouse’s plan and is at least 10 years younger than the older spouse, a separate RMD calculation is applied. This calculation will allow couples to withdraw less money from the older spouse’s plan than would normally be required to help preserve assets for the younger spouse’s presumably longer lifespan.

In addition, the older spouse should consider waiting as long as possible (usually age 70) to start claiming Social Security benefits. This will maximize not only the older spouse’s monthly benefits, but also the younger spouse’s survivor benefits. And if the older spouse receives a pension, consider setting pension elections to joint and survivor benefits so the younger spouse can continue receiving pension benefits if the older spouse dies first.

Please contact us if you have more questions about age gap retirement planning.


The commentary is limited to the dissemination of general information pertaining to Frontier Wealth Management, LLC’s (“Frontier”) investment advisory services. This information should not be used or construed as an offer to sell, a solicitation of an offer to buy or a recommendation for any security, market sector or investment strategy. There is no guarantee that the information supplied is accurate or complete. Frontier is not responsible for any errors or omissions, and provides no warranties with regards to the results obtained from the use of the information. Nothing in this document is intended to provide any legal, accounting or tax advice and Frontier does not provide such advice. This information is subject to change without notice and should not be construed as a recommendation or investment advice. You should consult an attorney, accountant or tax professional regarding your specific legal or tax situation.