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DICK YOUNG: Financial planning for the modern family

Retirement tradition has changed over the years. SUBMITTED PHOTO
Retirement tradition has changed over the years. SUBMITTED PHOTO

It was once a given that spouses would retire at around the same time. Couples would then set off for months of travel or could at least spend more time together. Having two people retire at the same time also simplified financial planning – advisors could factor in two pensions, tax plan around the withdrawals of two RRSPs and more.

Now, though, many people are marrying spouses who are much younger than them. One might be nearly ready for retirement while the other still has two decades to go. That can complicate a couple’s financial picture, says Jane Olshewski, Manager of Financial Planning Programs for Investors Group: “There are so many more things to consider. For instance, they’ll need help figuring out how much to save for their respective retirements. If they choose to stop working at the same time, they will need a considerable nest egg to fund the younger spouses’ golden years. If one spouse keeps working, the one who retires may not need to withdraw as much from their RRSP or RRIF.”

Children from previous marriages can also add complications. If you want to leave an inheritance to your children, you may need to do some more intensive estate planning to ensure you’re not disinheriting them by leaving your assets to your younger spouse.

Those are just a couple of retirement planning dilemmas facing couples with significant age gaps -- and there are others. Calgary’s Rachel Johnson, 45 and James Matias, 66 have six children between them – three from Matias’ first marriage and three of their own. They’re also providing support and caregiving for James’ elderly parents and the couple will likely need to do the same for Rachel’s parents in the years to come. 

As well, because Matias is so much older, Johnson may be required to provide support and care for an aging husband down the road.

In addition to financial issues, age-diverse couples have decisions to make about life planning issues. “Should couples in this situation retire at the same time?” asks Olshewski. “A younger spouse may want to retire and spend some time with the older spouse and do all the things that couples enjoy in retirement while both are still healthy. But the younger spouse may feel they have more to accomplish in their career and aren’t ready for retirement at an earlier age.”

“Each couple must look at their specific situation and decide on a life plan that works for them,” says Olshewski. “And be supported by a financial plan that will get them where they want to go – together.”

Regardless of your age, your professional advisor can help make that happen – for you and your partner.

This column, written and published by Investors Group Financial Services Inc. and Investors Group Securities Inc., presents general information only and is not a solicitation to buy or sell any investments. Contact your own adviser for specific advice about your circumstances.


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