Exploring the Pros and Cons of Retiring Before Your Spouse

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I recently made the decision to retire early. My wife did not. She continues to work the same number of hours at her same job.

Our path enables me to be free of a job I was burnt out on, improves family dynamics, and allows us to live with financial abundance.

No decision is without trade-offs. Having one spouse working when the other leaves their career creates new challenges at the same time it solves others.

Retiring before my wife produces new relationship stress, limits financial and personal options that would be available if we were both retired, and creates unique risks.

There are major personal and financial implications for partners retiring at different times. They need to be considered to determine if this strategy makes sense for you.

What Are the Advantages and Challenges of Retiring Before Your Spouse?

AdvantagesChallenges
Enables improving lifestyle sooner.Freedom is limited by working spouse's commitments.
More time can improve relationship dynamics between spouses and with kids.New relationship dynamics can introduce misunderstandings and resentment.
Working spouse can obtain medical insurance for the household.If working spouse's job doesn't provide insurance, their income can increase insurance costs.
Having only one income can drastically reduce income taxes.Having an ongoing income can limit early retirement tax planning strategies.

Pro: Gaining Freedom Sooner By Retiring Before Your Partner

I burnt out in my career as a physical therapist. Working in a service industry locked me into a cycle of needing to trade time to make money.

I didn’t think changing employers would improve my working conditions. Retirement looked like my best option to free myself.

Three years ago, my wife took a new job that allowed her to to work thirty hours per week with benefits. Her new position had schedule flexibility and allowed working from home. Her company was family friendly, emphasizing a work-life balance for its employees. She enjoyed her new work and loved the company she was working for.

Despite her near ideal work conditions, she still lacked freedom. Because she was working less than I was and not commuting, most day to day activities to keep our house functioning fell to her. Though she enjoyed her work, the combination of work, parenthood, and running our household was often overwhelming.

We built substantial resources to give us financial independence, but were afraid to use them. Uncertainty around the health insurance market, current market conditions, and our long retirement time frame made the idea of retirement intimidating.

Retiring first gave me much more freedom. It freed up fifty hours per week which I previously spent at the office or commuting. I now spend my days focused on projects and hobbies that interest and excite me.

Part of my time now goes to the household tasks my wife used to do. So despite continuing her same work schedule, she has more freedom with her time now as well.

Her continued income provides us additional freedom. We’re able to live with an abundance mentality, with little financial worry.

Con: Freedom is Limited When One Spouse Is Still Working

When one spouse is retired and the other is not, freedom is limited. My wife’s working conditions are about as good as one can expect.

Still, she often reminds me that just because I’m retired, it doesn’t mean she is. She has regular weekly meetings to attend, deadlines to meet, and required hours to meet her contractual obligations.

I’m working as well, producing content and promoting this blog, working on my book, and doing most of the housework. But I have total freedom over my time. Other than occasional meetings or appointments, I have no specific time constraints.

I can get outside any time I want. I can travel for prolonged periods of time. But I’m still limited, because the person I want to spend my time with most does not have that freedom.

It’s easy to romanticize retirement as the time when you trade your job for freedom. I know I did. Now that I’m on the other side, it’s become abundantly clear that freedom is still limited.

It’s vital to realistically think about what retirement will be like so you don’t set yourself up for disappointment once you achieve the retirement you’ve worked so long and hard to obtain. Retiring when your spouse continues to work limits your freedom.

Pro: Improved Relationship Dynamics by Freeing Up One Spouse

Since I retired, my wife and I both have seen an improvement in our relationship. When we were both working, days would go by when we couldn’t seem to find five minutes to talk.

Since I quit working, we spend quality time together every day. Most days we take a long walk together and talk. We reserve a day each week to be together by ourselves while our daughter is in preschool. Several nights a week we cook together, and we eat our meals as a family.

I also felt limited connection to my daughter when working.

I would typically wake at 4:30 every morning to workout, write, and get myself ready for work. My wife took care of everything with our daughter. I would scoop my daughter up on my way out the door to work and drop her at daycare.

I picked her up around 5:30 each evening. By that point, we all were tired and she still needed fed, showered, and prepared for bed, which occupied most of the time we had before putting her down around 8 pm.

Since retiring, the three of us spend the hour between waking her and taking her to preschool eating breakfast, talking, and reading books together. I usually pick her up early in the afternoon and we spend our afternoons on the ski slopes, at the library, or playing at home.

My availability and willingness to help around the house freed up more time for my wife to bond with our daughter as well. Only I retired, but our whole family dynamic has improved dramatically.

Con: New Relationship Strains When One Spouse Is Still Working

My retirement has been a net positive for our relationship, but having one spouse working while the other is not creates new stress. This is something we recognized could be an issue prior to me leaving my job.

We’ve worked hard to set and meet expectations of each other. We also work consistently on communicating and making adjustments. Still, there are periods of resentment, frustration, and misunderstanding.

Related: Marriage, Mental Health, and Money — Protect Your Most Valuable Assets

My wife occasionally feels frustrated and resentful of the amount of time and freedom I have, while she still at times feels too busy. I get frustrated when her work restricts things we could otherwise be doing, or she is tired after working a full day when I’m eager to go do something. At times, we fail to appreciate the benefits of what the other is bringing to our relationship.

This could easily create problems in a relationship without careful planning and ongoing communication. Robert Laura covers these challenges well in the Forbes article, “When Husbands Retire First”.

Pro: A Working Spouse Can Qualify for Employer Provided Medical Insurance

The most common question and concern we get is how an early retiree can obtain medical insurance. The ultimate answer is always the same. There’s no good universal option.

Having employer provided medical coverage for our family solves this problem for us as long as my wife works and her employer offers this benefit. This may be the biggest advantage to having one spouse continue working after the other retires. My wife is required to work at least 30 hours per week to qualify for medical coverage.

Her situation is typical. According to the Kaiser Family Foundation, only 21% of employees who worked less than 30 hours/week are offered health insurance by employers, compared to 72% of employees who work 30 hours or more. It may make sense to have one spouse work enough to qualify for insurance benefits.

Unfortunately, this is not an option for many. Many companies are eliminating health insurance benefits for employees’ spouses. This is consistent with a trend of trying to control costs by cutting health insurance benefits.

One working spouse can create challenges if that work does not provide medical insurance for the entire household. Even if it does, having one spouse work can produce additional risk for an early retiree.

Con: Income Can Make Medical Insurance Much More Expensive

If a household needs to buy medical insurance through market exchanges because employer provided coverage isn’t offered, there is great incentive to keep household income low. This is a good reason to work until you’re comfortable with very little income, ie., both spouses would retire or work little.

Kaiser Family Foundation provides a Health Insurance Marketplace Calculator that helps determine your subsidy and out of pocket expense based on age, family size, and geographic location. This allows you to experiment with different scenarios.

Using our situation with a family of two adults in our early 40’s and a young child, a small income of $24,000 would get us over 100% of the Federal Poverty Level (FPL). This would entitle us to a $1,371/month subsidy and require us to pay only $40/month ($480/year) for insurance coverage for a silver level plan available to our family in our geographic area.

The most we could earn and still qualify for a subsidy would be about $81,000. With this income, our subsidy would be $766/month and our out of pocket premium costs would be $645/month ($7,740/year).

If our income increased just $1,000 more to $82,000 year, it would push us above 400% of the FPL. Harry Sit terms this the “subsidy cliff”. There would be no subsidy and out of pocket costs for insurance premiums would jump to $1,412/month ($16,940/year).

UPDATE: The American Rescue Plan Act Eliminates the “Subsidy Cliff” for 2021 and 2022

ACA subsidies provide great incentive to keep income low in retirement. While health insurance is a big reason we elected to have one spouse continue working, health insurance subsidies could be a reason to opt for both spouses retiring.

Con: Relying on Employer Provided Medical Insurance Increases Risk of Limiting Future Options

An alternative to traditional medical insurance for an early retiree is the use of health care sharing ministries (HCSM). A HCSM is less expensive than traditional medical insurance premiums.

One reason HCSM cost less than traditional medical insurance is because they are not medical insurance, so they don’t have to comply with regulations that govern traditional insurance. HCSM can deny someone with a pre-existing condition.

If we had to make a decision today, we would consider a HCSM. My family is healthy and would be able to enroll in a HCSM at reasonable cost.

Each year we kick the can down the road on making a long term decision on medical insurance is a year we could develop health issues. Thus, we are adding risk that by the time we may need a HCSM, it may no longer be an option.

Pro: Tax Advantages When One Spouse Retires First

Many people reading this may be on the fence, unsure whether they have enough to retire. One option is semi-retirement. Having some ongoing income can decrease stress on a portfolio.

There are different ways to accomplish this. Both members of a couple could cut back simultaneously, or one spouse could leave the workforce while the other continues to earn income. In either scenario, substantially decreasing income has two major tax benefits.

The first benefit of reducing income is that earned income will be taxed more favorably. A couple filing taxes married filing jointly in 2021 can earn $25,100 free of federal income tax using the standard deduction. They can earn an additional $19,900 taxed at 10%. The next $61,150 is taxed at 12%.

This gives a married couple filing taxes jointly the ability to earn $106,150 before marginal tax rates jump to 22%, allowing them to pay an effective federal income tax rate well below 10%.

Earnings beyond this are taxed at their marginal rate, jumping to 22% and progressing as high as 37% for the highest earners. Every additional dollar is taxed at the higher marginal rates. This gives incentive to keep taxable income in the lower tax brackets to earn more tax efficiently.

There is a second incentive to keep earned income in lower marginal tax brackets. Qualified dividends and long term capital gains for those with income in the 12% marginal tax bracket or below are taxed at 0%. These same investment earnings for those in higher tax brackets are taxed at 15-20%. This can provide substantial tax savings for someone contemplating early retirement who is likely to have a sizable taxable investment portfolio.

Related: The Amazing Tax Benefits of Semi-Retirement

Con: Having a Working Spouse Limits Retirement Tax Strategies

Conventional wisdom for those planning early retirement is to maximize tax-deferred savings. With a long retirement time frame with little to no income, you can utilize tax rate arbitrage, deferring taxation of money that would have been taxed in higher brackets when earned and recognizing it in lower brackets in retirement.

Utilizing Roth IRA conversions, a married couple with no earned income could convert $25,100 from a tax deferred account to a Roth account utilizing the standard deduction, and pay no income tax on this money. A couple could convert over $100,000/year, up to the top of the 12% tax bracket, and pay low tax rates as shown above.

When you have a spouse working, or otherwise earn income with semi-retirement, you fill up lower tax brackets with earned income. This limits or eliminates the effectiveness of Roth IRA conversions.

Related: Early Retirement Tax Planning 101

Remember also that while most people think of the Affordable Care Act (Obamacare) as a health care law, it is essentially a tax law. It is advantageous for those obtaining health care on public exchanges to keep income relatively low to optimize ACA premium subsidies and limit out of pocket costs. Having a working spouse or other earned income can make this a challenge.

Do the Benefits Outweigh the Downsides of Retiring Before Your Spouse?

Several factors led us to make the decision to have me retire while my wife kept her job. My unhappiness at work was carrying over into our home. We had saved enough that we didn’t need the rat race and high taxes that came with a two income household.

At the same time, my wife’s continued work alleviates financial stress, provides affordable medical insurance for our family, and gives us most of the flexibility and freedom of full retirement. While not a perfect situation, the positives clearly outweigh the negatives for us.

Everyone has to decide what  is best for yourself and for your family. Having one spouse retire before the other is a strategy that can create a better lifestyle more quickly.

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This post was originally published on April 23, 2018 and most recently updated on October 19, 2021.

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[Chris Mamula used principles of traditional retirement planning, combined with creative lifestyle design, to retire from a career as a physical therapist at age 41. After poor experiences with the financial industry early in his professional life, he educated himself on investing and tax planning. Now he draws on his experience to write about wealth building, DIY investing, financial planning, early retirement, and lifestyle design at Can I Retire Yet? Chris has been featured on MarketWatch, Morningstar, U.S. News & World Report, and Business Insider. He is also the primary author of the book Choose FI: Your Blueprint to Financial Independence. You can reach him at chris@caniretireyet.com.]

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8 Comments

  1. I really relate to this post, being semi-retired for many years but having a husband who will never retire until ill health obligates him to, I guess, because he loves every aspect of his work and it is tied into every aspect of his life that he enjoys. I have resigned myself to that aspect (he has flexible hours so I still get to enjoy his company!) but what I cannot resign myself to is being stuck in the city we live in forever. We’ve lived here 25+ years and I’m ready for a change! The expense, the traffic, the noise, the weather, the population density are all becoming intolerable. Unfortunately, his work (and my part-time work) is tied to this place. So that is our dilemma. It would be insane to leave a job he loves just to move to a cheaper, more amenable area, right? And by the time he is forced to leave work, we will probably be too old to enjoy the amenities of a new city/town.

    1. Your story is a great example of the realities that we all face. Would either decision be insane? I don’t think so. Is your situation representative of the challenges we all encounter when making the retirement decision? Absolutely.

      I think too often we get caught up in oversimplifications. Every decision involves trade offs, which is the message I try to convey in this post specifically and my writing generally. We all would love easy answers, but they unfortunately rarely exist.

  2. This can work if both spouses are on the same page. I am so fortunate to have a wife who shares my interests and goals.

    I am 8 years older than my wife and I retired 16 years ago at age 59. We determined we had enough money to continue our lifestyle without working but she enjoyed her job and the social interactions.

    So, she continued to work until age 63 while I took over the household chores, with the exception of dinner prep. She really enjoys preparing dinner.

    It was no big deal to me as I had many years of living single and am plenty capable of performing the chores she had done when I was working insane hours and always on-call.

    This not only gave us more quality time together, it allowed her to max out her 401k while keeping just enough “earned income” for us both to contribute to Roth IRAs.

    We are now 3 times wealthier than when I retired. Who knew? My spare time was spent learning to be a DIY investor and move our savings from a major brokerage to Vanguard.

    Neither of us could be happier with the outcome.

  3. Since we’re talking about a FIRE audience here, if you have $1M+ in investible assets at one brokerage firm, you should ask if there are free advisors available (I know both Fidelity and Vanguard has them). I have had positive experiences with my Fidelity guy and I think he’s pretty unbiased (BTW, he explicitly brought up the Roth IRA conversion item without me asking) but I know experiences vary. Just a thought.

  4. Chris,
    This is exactly what we did when I left my mind numbing job in August at 49 (hubby is 46). Although we could easily leanFIRE right now, hubby received some unexpected promotions from an hourly employee to a salaried supervisor and he is LOVING it. He would like to spend a few years exploring this new position. I now handle all the household chores that we used to split evenly so he regained his weekends that we used to spend trying to clean/shop/laundry. Win/win in our eyes!
    Roxanna

  5. Chris,

    I agree with all aspects of your article. Though not fully retired, my part-time status has lead me to encounter some of the same things – both pos and neg.

    I do have more time, but as you know, I try to use some of this time to grow my RE biz. Dont get me wrong, I dont HAVE to do this, but its an interest and financial goal of mine to build it. Who doesnt want their existing businesses to grow, right? My wife has other uses for this time!

    On the other hand, the extra time has afforded our family and household much less strain regarding schedules, duties, and everything.

    Like you, net total = positive!

  6. Thanks for your perspective on this topic that is important for so many people–of either gender. My husband and I read both your post as well as the link to Robert Laura’s Forbes piece, and we appreciate what you both have to say.

    On the whole, you provide a balanced perspective with nuance and honesty, and we thank you for that.

  7. Chris, I like the fact that you mentioned relationships and not just financial considerations in this post. For practical reasons, we all can (and often do) run all numbers imaginable when considering retirement or early retirement. But I believe that the impact on family relationships should be considered, as well, even more so if there are still children in the home at the time of retirement. I left the workforce toward the end of our daughter’s junior year in high school. (Our son was already living on his own by then.) Since Alan had retired a few years before me, we had the opportunity to support our daughter by attending every one of her home and away softball games and tennis matches together during her senior year. It was an unexpected benefit that reinforced our family bonds and allowed us to celebrate with her some of the most memorable moments of her high school sports career. You mentioned that both you and your wife are able to spend more time with your daughter. In this situation, the benefits to family relationships can’t be quantified and measured like many other aspects of retirement, but should be an important consideration just the same. As you mentioned, solid communication is the key – just as it is with financial matters.

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