The statistics show that approximately half of all Canadian couples near their retirement age expect to retire at the same time. Expectations don’t always meet with reality though, as only about 30% of these couples actually retire at the same time.[1] This discrepancy indicates that a lot of Canadian families are choosing to take the synchronized approach when they should’ve considered the relay approach. Here are the differences between the two. Use these explanations to determine which approach is the best for you and your spouse.
The relay approach
The relay approach is when one spouse retires before the other. This can be done for a number of reasons, such as one spouse being attached to their job, or if there is a significant age difference between spouses. In some cases, the relay approach becomes planned for you. For example, if one spouse needs to retire earlier than expected because of health issues, you will have no choice but to retire at different times.
There are a number of financial benefits to retiring at different times. With one person working longer, a couple can increase their retirement saving to delay drawing from their nest egg. They can also continue to receive group insurance benefits from the employer of the working spouse. This can also delay the start of Canadian Pension Plan payments for a higher pension.
The synchronized approach
When you plan on retiring around the same time as your spouse, it is called the synchronized approach. The first obvious benefit is being able to enjoy your retirement together as the next step in your life begins. To maximize the number of years you can spend together, you may consider retiring early, as long as you have planned for it and have enough retirement savings. If retiring together means one person is 75 and the other is 65, the synchronized approach may not work out because the older spouse may not have the energy or fitness to pursue an active retirement.
The most important part of your retirement plan is communicating with your spouse about your retirement goals and needs. Once you have those things settled, the next step is to speak to a retirement planning specialist at The Beacon Group of Assante Financial Management, Ltd. They can help you put your retirement and financial plans in place so you can retire when you want to.
[1] Statistics Canada, “Retiring Together, or Not,” Perspectives on Labour and Income, 2008.
