Making decisions about your retirement can be involved – and even more complex when there is a substantial age gap between you and your spouse. Substantially different retirement dates complicate such decisions as when to start taking Social Security, when and how to start withdrawals from your investment portfolios, and how to anticipate healthcare costs. Without proper planning, age-gap couples can easily outlive their money.
Uncle Sam already offers age-gap couples help in stretching their nest eggs over their joint life spans. If you are retired and your spouse is at least 10 years younger and the sole beneficiary of your IRA, you can reduce your annual IRA required minimum distributions (RMDs). Simply use Table II in IRS Publication 590-B to calculate your RMDs, as opposed to Table III. If you rely on your IRA custodian to calculate your RMD each year, chances are they are using Table III, meaning you may be pulling more from your retirement savings – and paying more taxes – than you are required to.
Uncle Sam may soon offer another helping hand to age-gap couples through legislation recently passed by the House Ways and Means Committee. If it makes its way through Congress as is, and is signed into law, the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 (H.R. 1994) would extend the age for RMDs from 70½ to 72. Other legislation has been introduced that would raise the RMD age to 75.
Of course, we know we can’t rely on Uncle Sam alone for help making our retirement savings last through our lifetimes. The best course of action for any retiree or pre-retiree, including age-gap couples, is to work with a professional wealth advisor. An HBKS wealth advisor will develop a retirement or income plan specifically tailored for you, to help you ensure you won’t outlive your retirement nest egg.