Many people grow up with the idea of retiring at 65 years old as a normal thing. However, today, retiring is not just about age, but also about understanding income, expenses, and Social Security rules.
In this article we are going to tell you the story of a couple wondering a very common question: ‘’could we retire together?’’ So, let’s find out what the answer is.
Financial situation of the couple
The couple receives money every month from three main sources:
- Two pensions: one of $3,600 per month, and the other one of $1,500 per month.
- Social Security: between both people, the couple receives about $3,500 per month.
After taxes, this means that they receive a bit more than $7,000 per month. What’s more, they have $140,000 cash saved, which can be used for emergencies or unexpected expenses.
When it comes to expenses, the couple estimates they need around $4,000 per month to cover the basics: housing, food, services, insurances, and other regular expenses.
So, they receive way more money than they spend every month.
Importance of Social Security when retiring
One of the key points is to understand how Social Security works when we talk about retiring. According to the Social Security Administration:
- The full retirement age is 67 years old for those who were born in 1960 or later.
- It’s possible to claim Social Security at 62 years old, but the monthly payment will be lower forever.
- If you wait beyond 67 years old to retire (until 70), the monthly payment increases.
Experts normally recommend waiting as much as possible, as long as health and financial situation allow it. The reason for this is that it guarantees a higher income for your entire life.
In this case, the husband is nearly 65 years old and the wife turns 65 very soon. So, delaying Social Security could improve long-term security, but it is not required for this couple to retire comfortably.
Spousal and survivor benefits
Another important point about this topic is to know how spousal benefits work. The wife doesn’t have her own U.S. work record, so she relies on spousal benefits. Social Security rules state:
- A spouse may receive up to 50% of the worker’s benefit.
- If the worker dies first, the surviving spouse may receive between 71% and 100% of the benefit, depending on age.
In addition, the husband chose survivor options on both pensions, ensuring continued income for his wife if he passes away. They also hold a $240,000 life insurance policy, which would provide an extra financial cushion. These protections significantly reduce financial risk for the surviving spouse.
Solid retirement plan
When analyzing the case, experts concluded that retiring is possible and sustainable for this couple. The reasons are the following:
- They have guaranteed income forever.
- Their income comfortably covers essential expenses.
- They are not forced to rely on market investments.
- They have accessible cash savings for emergencies.
Experts often suggest keeping one to two years of expenses in cash. The couple’s $140,000 in savings helps meet this recommendation.
Things to keep in mind
Even with a strong plan, you should have in mind a few things:
- Unexpected home or car repairs.
- Future healthcare expenses.
- Choosing the right time to claim Social Security.
These are not reasons to delay retirement, but reminders to plan carefully and stay flexible.
To sum up
By learning how all these points work and planning for unexpected costs, you put yourself in a stronger position to retire with confidence. This example proves that retiring in the United States can be achievable, stable, and less stressful when you take the time to understand the basics and plan wisely.