Couples with large age differences, also known as May-December marriages, are not doomed to fail, despite what they may hear from well-intentioned relatives. They just face a few extra bumps on the road to relationship bliss.
Like all couples, money coaches say age-gap spouses need to secure their financial future by defining their goals, funding their retirement, drafting an estate plan, and managing risk with insurance coverage, as needed. However, it is particularly important to be proactive when one partner is a decade older or more.
“Age is a huge part of financial planning because whether you will need your assets to last for 10 years or 40 years makes a huge difference,” said Angela Moore, a financial advisor and money coach with Modern Money Advisor in Miami, Florida. “It’s also more complex when there’s a large age difference because there are so many unknowns. For the much younger spouse, you don’t know what the tax situation or even Social Security will be like when they eventually retire.”
May-December marriages, often highlighted in the Hollywood press, may be more common than you think. The term alludes to the fact that one partner in the relationship is in the proverbial spring of their life, while the other is in the winter.
According to one study, roughly 8 percent of heterosexual married couples in Western countries report an age gap of at least 10 years. The rate may be even higher among same-sex, or LGBTQ, couples. The same study found 25 percent of male-male unions and 15 percent of female-female partners report at least a 10-year age gap.1
On the financial planning front, age affects everything from one’s investment strategy to the withdrawal rate from pension plans and retirement accounts. Age also dictates eligibility for Medicare and projected health care costs.
If you’re in a May-December marriage, or soon will be, the following discussion points will help you determine whether you’ve covered all your financial bases.
Couples with large age gaps should begin the planning process by discussing the age at which they expect to retire, said Kristi Sullivan, a financial planner with Sullivan Financial Planning in Denver, Colorado.
Consider that if your spouse is 15 years your senior, you may be in your peak earnings years when he or she retires.
“The younger partner may want to keep working and finish out their career, but that doesn’t always happen,” said Sullivan. “Often, the younger spouse quits the workforce so they can travel and spend time together.”
That means the income stream comes to a screeching halt, which has profound implications for the couple’s lifestyle in retirement. It may also leave the younger spouse at risk of outliving their assets, especially for women, who statistically live longer than men . (Need to know: Why women need to be financially selfish )
Remember, too, that if the younger spouse retires before age 65, he or she would generally not be eligible for Medicare, the federal health care program for senior citizens.
Private health insurance can be cost prohibitive, especially for someone in their 40s or 50s with a medical history. So couples need to be sure those expenses get factored into their budget if either of them plan to exit the workforce early.
All couples who plan to have kids should consider the costs of child rearing, but that goes double when the breadwinning spouse is significantly older, said Sullivan.
The couple may need to modify (scale back) their lifestyle to super-size their savings while the older spouse is still producing an income. He or she may also need to delay retirement until their projected expenses are covered. Or, the younger spouse may have to work until full retirement age to fortify their nest egg and maintain health insurance coverage at work. All scenarios should be discussed in detail, especially if the future parents intend to cover the cost of college tuition, said Sullivan. ( Related: New parent budgeting )
According to the latest U.S. Department of Agriculture data, the average cost of raising a child from birth through age 17 is $233,610, or $284,570 when adjusted for inflation, not including the cost of a college education.2
“Those kids need to be supported financially and college is a big nut to cover when you’re retired,” said Sullivan.
Life insurance, which helps replace the policyowner’s income in the event that he or she should die, can be an effective way to mitigate financial risk and protect the policyowner’s family, she said.
A financial professional can help couples determine which coverage options might be right for them. (Calculator: How much life insurance do I need?)
Age-gap couples should also consider that the older spouse will likely develop health complications sooner, which may include cognitive decline and/or physical frailties. Is the younger spouse prepared to retire early to become a caregiver if needed, or would they need the younger spouse’s income to cover the bills?
Either way, the younger spouse should be prepared that they may be on their own in old age when they need caregiving themselves, said Sullivan.
The national median cost for assisted living facilities in 2018 was $4,000 per month, while home health aides cost $4,200 monthly, according to that latest survey from Genworth.3
To protect themselves and preserve their assets for any heirs, Sullivan suggests that younger spouses consider long-term care coverage to help pay the bill for assisted living expenses that Medicare generally does not pick up.
Annuities and pensions
For age-gap couples, the name of the game is managing longevity risk, or ensuring that their savings last as long as they both shall live.
In a hypothetical May-December marriage with a 15 year age difference, where both spouses retire when the older partner turns age 65, those savings may need to support the younger spouse from age 50 through 100 – half a century. (Mortality projections are imperfect, but given medical advances, many financial advisors today suggest that their clients have enough money set aside to cover their living expenses in retirement through at least age 100.)
There are ways, however, to help make one’s money last:
So-called longevity annuities, more properly known as deferred income annuities (DIA), provide guaranteed ongoing income starting at an agreed upon age, as long as premiums are paid on time. But such a vehicle is not the right solution for everyone. A financial advisor can help you determine whether a DIA may be right for you.
Many older Americans also still have pension plans available through work or a former employer, which provide a guaranteed monthly income. That can be a lifeline for a surviving spouse. The pension holder would have to claim a “joint and survivor benefit,” however, which yields a lesser monthly income payment than they would receive under a “single life benefit.” But the survivor benefit option guarantees that the surviving spouse will continue to receive a benefit if the pension holder dies first.
Social Security claiming strategies may also help insulate younger spouses from the threat of outliving their assets.
Older spouses who had higher earnings and can afford to wait, can potentially delay claiming benefits beyond their full retirement age to boost the size of their spouse’s future Social Security checks. For each month they delay, the size of their Social Security benefit will grow incrementally, maxing out at their full retirement benefit at age 70, when the benefit of delaying any longer disappears.
How does that help a younger spouse? While the older spouse is alive, the younger spouse can claim their own Social Security benefit or a percentage of their higher earning spouse’s starting at age 62, whichever is greater. (To collect their full benefit, they will still have to wait until their own full retirement age to begin taking benefits.)
When the older, higher earning spouse passes away, the surviving spouse is switched to a Social Security survivors benefit, which is equivalent to 100 percent of the late spouse’s benefit, including any delayed credits they accrued.
The earliest a widow or widower can begin receiving Social Security survivors benefits based on age is 60.4 Remember that benefits taken before full retirement age are reduced for early filing.
Moore said couples should be aware that most claiming strategies for pension and Social Security benefits are irreversible, making it critical that they seek advice from a qualified source.
(Learn more: Filing for Social Security retirement benefits )
The government requires Individual Retirement Account (IRA) holders to begin taking required minimum distributions, or RMDs, beginning in the year they turn age 70-½. But you calculate your RMD differently if your spouse if much younger than you.
Most couples use the Uniform Lifetime Table to calculate their distribution, but the Internal Revenue Service allows individuals to use the Joint Life and Last Survivor Expectancy table if their sole beneficiary is a spouse who is more than 10 years younger. The net effect is that you will not be required to withdraw as much money each year, which allows the dollars left behind to continue delivering tax-deferred growth.5
May-December couples should not forget to take advantage, advised Sullivan.
An estate plan can provide peace of mind for yourself and your loved ones. It helps ensure that your assets are distributed as you intend after you die and it clarifies your wishes for end-of-life care. Done correctly, it may also leave your heirs with a smaller tax bill.
Moore said all couples should have:
- A last will and testament, which defines how you want your assets distributed and who would care for any minor dependents
- A financial power of attorney, which identifies another person to make financial and legal decisions on your behalf in the event that you become cognitively impaired or incapacitated.
- A health care directive, also called a Durable Power of Attorney for health care, which grants another person the authority to make health care decisions on your behalf in the event you become cognitively impaired or incapacitated is also important.
- A Health Insurance Portability and Accountability Act (HIPAA) privacy release form that gives health care providers who treat you permission to disclose and discuss protected health information with the people you name so they can make informed decisions on your behalf.
- A living will, which spells out your wishes for end-of-life care and takes the decision making off your loved ones’ shoulders.
“You might have children in their 40s or 50s, but you’re married to someone in their 20s,” said Moore. “You need to decide whether you want your adult children to make business or end-of-life decisions for you in the hospital or whether that should be your spouse. These conversations need to be had well in advance.”
(Learn more: Budgeting for blended families )
Not all marriages work out. Given the divorce rate, Moore suggests that all couples consider a prenuptial agreement that legally defines which premarital assets and debts will remain separate and which (if any) will be combined, including real estate, brokerage accounts, retirement funds, and life insurance policies. (Related: Life insurance’s role in divorce )
Importantly, prenups also spell out what each partner is entitled to should the marriage end in divorce, which is especially critical if one or both partners has significant assets or kids from a prior relationship.
Prenuptial agreements protect both sides. A much younger spouse who spends 20 years as a caregiver wants to be sure that he or she will eventually be left with enough money to live on.
Contrary to popular belief, prenups do not suggest that a couple is less committed. Rather, it forces dialogue on how you will both provide for each other if your union doesn’t last, said Deborah Price, chief executive officer and founder of The Money Coaching Institute in Petaluma, California.
“It’s not about what you’re going to get if the marriage should dissolve, but how you are going to take care of each other,” she said. “If you love this person today, you don’t want to see either party treated unfairly.”
For May-December marriages, the importance of financial planning cannot be overstated.
By taking steps to eliminate longevity risk and communicating honestly about their goals and expectations, age-gap couples can eliminate many of the obstacles that stand in the way of a healthy relationship —so they can focus on building a future together.
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1 Taylor & Francis, "The Dark Side of Close Relationships II,” Sept. 13, 2010.
2 U.S. Department of Agriculture, “The Cost of Raising a Child,” Jan. 13, 2017.
3 Genworth, “Cost of Care Survey 2018,” March 13, 2019.
4 Social Security Administration, “Benefits Planner: Receiving Survivors Benefits Early,” 2019.
5 Internal Revenue Service “IRA Required Minimum Distribution Worksheet.”