If you are lucky enough to have found that special someone late in life (or are taking a second trip down the aisle), you're probably overjoyed to begin sharing your life together. And if the old saying holds true—that with years comes wisdom—you probably know you have to plan for more than the seating arrangements at the wedding.
While younger people usually occupy themselves with the festivities of planning a wedding, a couple in retirement will need to focus on some of the financial realities before saying "I do." Whether this is a first-time marriage or a second, it's important to get a plan in place to help secure your mutual and individual long-term well-being, and that of your families and heirs.
Here are some essentials for planning your future together:
As with any couple getting married, it’s important to discuss your financial history as well as your financial philosophies. This will help you both better understand where you stand and how you see your future together. One of the national credit reporting agencies suggests couples go over a list of questions about financial matters and also review each other's credit histories to be sure you are both fully aware of your individual and combined finances.
It's important to sit down together and fully detail your assets and financial obligations and talk through how you envision your future together. This is especially important if you are going to become a blended family. If one or both of you have children from previous marriages, you’ll need to be doubly careful about what assets you want to set aside for them to be sure there are no misunderstandings or hurt feelings down the road.
Some of the questions you should go over include:
- Where will you live? Will the house be jointly owned?
- Which expenses do you plan to share?
- Which assets or income do you hope to combine or keep separate?
- What family financial obligations do you have? Do you have a child in college whom you still support? Or an older family member whom you are responsible for?
- What personal effects or property do you want to own jointly or give to an heir?
Once you've established a clear understanding of your individual and joint financial situations, you'll want to look at how to best blend your financial lives. You may choose to keep some assets and obligations separate while joining others or perhaps look at new methods for securing your shared future, including looking at long-term care options, additional insurance or trusts to pass assets/wealth on to your heirs.
Before signing your marriage certificate, you’ll likely want to visit an attorney to draw up or revise essential documents in your estate plan, including updating your will and powers of attorney (both durable and medical). You may decide to coordinate your wills or estate planning documents and/or keep individual wills in place, depending on your estate structures. You may also decide to have a prenuptial agreement that can lay out all the financial responsibilities and assets of each partner and detail your joint agreement on how your assets will be joined or separated during your marriage and beyond.
It’s important these documents reflect your desires on how you want your assets to be used to support both your new spouse, your children or any other legacy plan you establish, to be sure there is little conflict about your intentions. Take into account the sentimental and emotional needs of your family in advance. There’s a lot of happiness around a new marriage, but there can also be concerns from children about their inheritance or personal family property, and it’s important to talk about these in advance to make sure everyone is aware of the decisions being made.
There are a few special considerations to be aware of regarding how marrying could affect your retirement income and long-term care.
If you are a widow or widower and are receiving benefits from your former spouse’s military or government pension, you will likely lose that income if you remarry. If this is the case, you’ll want to determine ways to compensate for that lost income.
Eligibility is based on the combined assets of a married couple regardless of title, beneficiary designation, wills or prenuptial agreements. This is particularly important if either of you becomes ill and needs temporary or long-term medical care.
A crucial detail to remember is to update any beneficiary designation on your assets, including any retirement funds, pensions, annuities and insurance plans. These designations trump a will, so it’s important that you and your spouse go through each asset to be sure you’ve designated each as you wish.
- Spousal Consent
You’ll also need to be aware that regardless of wills or prenuptial agreements, federal law requires the spouse to be the named beneficiary of a qualified plan account (such as a 401k or 403b) unless the spouse consents in writing to another beneficiary. Rules for IRAs will vary from state to state. If you want to designate someone other than your soon-to-be spouse as heir to these accounts, you will need to be very clear about your intentions and, once married, get the consent signed by your spouse.
To help you put the legal and financial framework in place, partner with your estate planning attorney and a financial representative. So as your big day approaches, having put a plan in place for your new family, both you and your partner will feel confident of your shared future and happiness.