3 Retirement Scenarios to Prepare For

The golden years look murky for many married couples still years away from retirement. Statistics show they haven’t planned well financially.

Almost half of married Americans – 46 percent ­– die nearly broke, according to a recent study by the National Bureau of Economic Research. Surveys by GoBankingRates showed 56 percent of Americans have put away less than $10,000 toward retirement, and that about 75 percent older than 40 years of age are behind on saving for retirement.

The uncertainties that lie ahead in retirement – life span, health, market factors, unexpected expenses – make it important for married couples to have different income plans in place to cover various scenarios.

Married coupled need three retirement income plans, but most don't have even one. 

Moreover, nine out of 10 people do not have a financial plan whatsoever. Though they may have investments, a holistic financial plan is helpful, especially for retirement.

Here are three scenarios that married couples can experience in retirement and how they can get by or plan ahead accordingly.

1. What if you both live to be 100?

One of the biggest fears people have in retirement is outliving their money. So, to do well if you both live well past normal life expectancy, it’s important to have money coming in from a solid combination of sources. For example, married couples may have two Social Security checks, one or two pension checks and then their investable assets. With that many income sources, they might be OK. Pensions, though, will be fewer in the future cautions, so it’s vital for those without one to plan ahead regarding the other assets.

2. What happens to her if he dies first?

This will immediately impact the monthly cash flow. The wife would get to keep the higher of the two Social Security checks but not both. Planning beforehand regarding how the husband’s pension check is set up, and whether he had a survivor benefit for the spouse, has a big effect on monthly income.

3. What happens to him if she dies first?

It’s a similar scenario to Plan B, with less monthly income due to the loss of one Social Security check. Proactive planning in asset areas can help cover the gap. The volatility of the stock market the past two decades means retirees can’t bank on the same withdrawal rates previous generations have used. This will affect the income stream a retiree can generate, ultimately making things that much more difficult for today’s retirees.

Though there are a lot of pieces to the puzzle, a proactive plan can allow for a positive future.

Jeff Dixson is known as “The Retirement Coach” and is the founder and president of Northwest Financial & Tax Solutions Inc. A respected financial educator, Dixson hosts a weekly radio show that airs on seven stations and is author of Winning The Retirement Game.