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Dear Pete,
I’m worried about what will happen to my retirement income when my husband dies. I’m 52 years old, and he’s 62. He’s made much more money than me for years, and I personally don’t have many assets. He plans on retiring sometime in the next year, and he wants me to retire too. We won’t have a pension, and he barely has enough to retire, but he’s going to do it anyway. This works fine until he dies, because he doesn’t have life insurance and he says he’s leaving some of his accounts to his adult children. What should I do?
Marie
Scottsdale, Arizona
This is a problem. Not a “cross this ‘t’ and dot that ‘i’ problem” but a very big problem. Retirement planning is difficult enough when both people in a marriage are the same age, but when there’s a sizeable age gap the problem gets especially complicated.
Statistically speaking, you will likely outlive your husband. And based on your age difference, you may be without him for well over a decade.
In a perfect world, you take your concern to your husband, he calls his life insurance agent and buys a giant life insurance policy on himself that will help create an income stream for you at his death.
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But I’ve done this long enough to know if that was in his wheelhouse of prudence, he would have already done it. Besides, the premiums for the policy would likely be cost-prohibitive at this point, especially if he’s barely able to retire.
The last thing you need is a pep talk from me about the importance of a woman taking control of her finances and sticking up for herself, but you’re about to get just that.
As much as you want to spend time together in an idyllic retirement, I highly recommend turning your focus to building your own financial plan. This plan means you need to keep working and make financial decisions based on your own personal retirement readiness. There is absolutely nothing wrong with this.
If you don’t take control of this situation, you will undoubtedly find yourself living a financial nightmare. Without proper planning, any person in a committed relationship would suffer the same fate.
Whether your husband secures life insurance or not, you should not personally retire when he does. You should view the next 15 years or so as your opportunity to create the sustainable stability you’ve always deserved.
Specifically, you should maximize your income and then save as much of it as possible in a company-sponsored retirement plan. In fact, you should focus on breaking your own personal dependency on your husband’s financial resources, all the while heavily weighing-in on decisions involving those resources.
Maximizing your income will allow you to maximize your available Social Security benefit, which will be key to creating your own sustainable income strategy. Based on your situation, you should likely wait as long as possible to tap this income stream.
Since I’m recommending something rather intense, it’s worth exploring the alternative.
The alternative is for you to do nothing. But here’s how that ends. Upon retiring at age 52, you will enjoy the next several years of retirement until reality hits. When a person “barely” retires, there are very real consequences.
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They will spend-down their assets and time becomes their worst enemy. The longer they live, the worse it gets. Your age gap will exacerbate this problem, and you will get left holding the bag. But unfortunately, the bag won’t have any money in it.
Retiring now is akin to buying a baby alligator and keeping it in your bathtub. Sure it’s cute, but don’t do it.
I’m so sorry you’re in this financial quagmire. But fortunately you have the power to fix it.
Peter Dunn is an author, speaker and radio host, and he has a free podcast: “Million Dollar Plan.” Have a question for Pete the Planner? Email him at [email protected] The views and opinions expressed in this column are the author’s and do not necessarily reflect those of USA TODAY.
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