Remarriage in Retirement
They say love is sweeter the second time around. It can also be a lot more complicated financially, especially for people who find one another later in life. Older couples typically come together with two sets of assets, separate homes, family commitments and, often, very different financial priorities. Melding all these together can be a challenge. So much so, that nearly half of couples age 50 and older simply live together without marriage and keep their financial lives separate. There are financial pluses and minuses either way. The key is to be sure you are familiar with the rules governing Social Security, estate planning and health insurance.
The first decision is whether to combine your financial assets and estate plans. A prenuptial agreement can be a particularly useful tool that spells out what belongs to whom and how those assets will pass to heirs and beneficiaries ensuring that both parties keep control of the assets they brought to the marriage.
Deciding what to do with assets accumulated during the marriage is another issue a prenup can help you control. Some states treat everything acquired by a married couple as community property, so your prenup should include a plan for dividing jointly held assets in the event of a death or a divorce. For couples who choose not to marry, a cohabitation agreement can provide some of the same protections.
Another confusing financial aspect of remarriage involves Social Security. As an example, if your first marriage lasted 10 years or longer, you are allowed to collect benefits based on your former spouse’s work record once you turn 62. That benefit ends if you remarry. If your new spouse’s earnings are less than your ex’s, your spousal benefit would be lower. Widows or widowers who remarry before age 60 should keep in mind that they stand to lose Social Security survivor benefits from their first marriage
The largest health issue every older couple faces is the impact a prolonged illness or injury could have on their savings. According to the U.S. Department of Health and Human Services, almost 70% of Americans turning 65 will eventually require some form of long-term care, and many insurance plans, including Medicare, provide little coverage for that. Long-term care insurance may be an important consideration.
Later marriages often involve the merger of families from previous marriages which can complicate inheritance issues. For example, many states have “elective share” laws, which automatically entitle spouses to as much as half of a deceased spouse’s assets, regardless of what it says in a will. A solid prenup will take precedence over those laws. (Unmarried partners generally do not have the same right as spouses to demand an elective share.) Couples may also want to consider trusts that provide separately for children from previous marriages. Because trusts can specify beneficiaries, they help to head off potential conflicts down the road, such as inheritance disagreements between children and a stepparent.
A final important step—that many couples forget, is to change the beneficiaries on your insurance, retirement plans and other important documents.
For more information, contact The Menashe Morley Group in the Rancho Santa Fe office at 858-381-8113. The Menashe Morley Group, serving the community for over 30 years: David Menashe is a Senior Vice President and Wealth Management Advisor, Bruce Morley CRPC is a First Vice President and Wealth Management Advisor and John Naviaux CPWA is a Vice President and Wealth Management Advisor for Merrill Lynch, Pierce, Fenner & Smith Incorporated.
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