5 Questions for Later-in-Life Marriages

June 14, 2024
Getting married later in life raises a host of unique financial considerations. Here's what you can ask yourselves before you tie the knot.

About 1 in 5 people over age 60 have married at least twice, according to the U.S. Census Bureau. However, not all marriages are created equal.

"Unlike those just starting out in life, many older individuals have adult children, substantial assets, and established financial habits that may not easily mesh with those of another person," says Susan Hirshman, director of wealth management for Schwab Wealth Advisory and the Schwab Center for Financial Research. "That's why my primary guidance for older couples isn't so much about dollars and cents but rather how each of you approaches money and how to head off any potential conflicts."

For starters, Susan suggests that those walking down the aisle later in life ask themselves the following questions.

1. Where do your financial values overlap—and where do they diverge?

Communication is a barometer for a successful union, especially where your finances are concerned. In fact, in a recent survey of 1,000 individuals who are divorced or in the process of divorcing, nearly one-fourth reported financial concerns as a factor.

Breaking points

Advance planning and open communication can help couples avoid some of the most common causes of divorce.

Common causes of divorce mentioned by couples include lack of family support (43%), conflict/arguing (31%), financial stress (24%), and opposing values (6%).

Source: Forbes Advisor, as of 08/15/2023.

"It's common for people to become combative or emotional when talking about money," Susan says. "Often the topic can feel personal because of factors such as our family histories, past successes and failures, and even feelings of self-worth."

That said, if you can overcome the discomfort and create an open dialogue with your partner about your finances and priorities, you can begin to identify commonalities and differences.

"Don't expect to see eye to eye on everything, because you probably won't," Susan notes. "The real value in these conversations is gaining insight into your partner's beliefs so you can work through challenges from a place of mutual understanding and respect."

2. How will you (or won't you) combine your finances?

Anyone entering a relationship has to grapple with how their partner manages money. But an additional wrinkle with mature marriages is that each of you may have amassed significant assets and managed your money independently for years.

This can make merging finances particularly complex, so couples should start with the most basic question: How will we combine our assets—if at all?

"Many clients find that a 'yours, mine, and ours' approach works best," Susan says. "Each spouse has their individual investment, retirement, and bank accounts, and together they each contribute to a joint account for shared costs such as mortgage payments, entertainment, and other day-to-day expenses."

The system can be a good starting point for discussing how much each spouse should contribute to the household—especially if one is significantly wealthier than the other. It also gives you the latitude to engage in your own spending habits without causing marital strife and to fund individual goals, such as making gifts to adult children.

You also may want to discuss your respective income and estate plans, credit scores, insurance policies (including life and long-term care, where applicable), outstanding liabilities, and philanthropic commitments. "The key is to enter the marriage with full knowledge of the other's financial situation," Susan says.

3. How will marriage affect your retirement plans?

If either or both of you are still employed and saving for your later years, ask yourselves whether getting married could change your retirement timeline. For example, if you have more than five years' difference between your ages, will the younger of you work to full retirement age or would you prefer to retire around the same time?

It's also critical to examine how each of you would like to spend your retirement years—traveling, perhaps, or moving closer to family—and work through any disparities. "Getting married later in life can throw a wrench in your retirement assumptions," Susan says. "Depending on where you land, you may need to update your financial plan."

Also consider how marriage could affect your sources of retirement income, such as Social Security. For example, generally you can collect 100% of your own benefits or up to 50% of your spouse's benefits, whichever is greater. However:

  • If you're already collecting based on an ex-spouse's work history, getting remarried will likely end that benefit, and future benefits will be based on your or your new spouse's work history.
  • If you're widowed from a previous marriage and planning to collect survivors benefits, remarrying before age 60 could eliminate that option. (Learn more about survivors benefits.)

Taxes are another piece of the retirement-income puzzle that shouldn't be overlooked. If both of you have accumulated significant tax-deferred retirement assets, your combined required minimum distributions—which currently kick in at age 73—could push you into a higher tax bracket and increase your Medicare premiums. "If you have more savings than you'll need and are worried about taxes, you may want to incorporate gifting and charitable strategies into your shared plan before and during retirement," Susan says.

A qualified financial planner can help you think through your shared retirement vision and strategize the best way to maximize your savings while minimizing taxes.

4. How will you plan for illness or incapacity?

Communication around how you want your health and finances to be handled is especially important as you age. Be sure to discuss with your partner how each of you would like to deal with your affairs in the event of illness or incapacity, including the extent to which you'd like other family members involved.

"No matter how much you love and respect your new partner, adult children in particular may feel entitled to have a say in your medical treatment plan or other critical decisions," Susan says.

Having a frank discussion with all parties is a start, but legally documenting the details is even more important. Toward that end, make sure you have:

  • A living will: Also referred to as an advance directive, this outlines your preferences regarding medical intervention and end-of-life care.
  • A health care proxy: Sometimes called a medical power of attorney (POA), this gives your designated proxy the authority to make medical decisions in any situations not covered by a living will.
  • A financial POA: This delegates control over any financial matters you specify, such as paying bills, making gifts, or managing property. Without a financial POA, a court may need to appoint a conservator to manage anything you don't own jointly with your spouse.

Beyond planning for declining health from a legal perspective, also discuss how you'll navigate any long-term care needs that may arise as you age. "We're all likely to need help with activities of daily living at some point in our lives," Susan says. "Do you intend to care for each other, involve adult children, or employ outside help? Ongoing care is a high-stress, emotional undertaking—and you could even reach a point when neither of you is able to care for the other—so you should be realistic about what each of you is willing and able to commit to."

If you plan to hire a home health aide, make sure your financial plan accounts for that. "Long-term care insurance is an option, but some people are uncomfortable paying for coverage they may never use," Susan notes. "If you'd rather self-fund long-term care as the need arises, be sure to factor current and future costs into your plan."

Above all, be sure to finalize your plans as early in the marriage as possible. "Most of us tend to have an optimistic view of the future and may avoid thinking about the possibility of our own incapacity, never mind our own mortality," Susan says. "But it's important to make decisions about these eventualities as a couple, especially while you're still healthy, and to communicate them to your families."

5. Who will inherit your assets?

Whenever you experience any major life change, you should review your estate plan. This means updating not only your will and any trust documents but also your beneficiary designations and how you title (individually, jointly, etc.) certain assets like a primary or vacation home. "It's not unheard of for an ex to receive a retirement account or life insurance payout simply because their former spouse forgot to change the beneficiary information," Susan warns.

If you have kids from a previous relationship, the question of which assets pass to your spouse and which pass to your children can be fraught. Having honest conversations with your partner about how best to provide for your individual heirs and each other can help you anticipate the expectations or concerns of family members.

For example, consider Neil, 55, a small-business owner and widowed father of two teenagers. He's engaged to Sarah, 60, a successful real estate investor and divorced mother of three adult children. Neil wants to ensure his minor kids are provided for after his death, whereas Sarah wants to pass most of her assets to her adult children while still providing some financial support for Neil.

Before Sarah and Neil marry, they create a prenuptial agreement in which each waives rights to alimony and any property that predates their marriage (see "In defense of prenups"). Given their complex situation, they also employ:

  • A qualified terminable interest property (QTIP) trust: Sarah places her real estate investments into a trust that, after her death, will pay Neil regular income from the assets for the rest of his lifetime. After Neil's death, the trust will distribute the remaining assets to Sarah's adult children in accordance with her wishes. QTIPs preserve the advantages of the marital deduction, deferring estate taxes until the death of the surviving spouse. However, they are irrevocable—meaning they cannot be changed—and the surviving spouse is limited to income from the assets and cannot access the principal in most cases.
  • Permanent life insurance policies: Because Neil owns a small business, which can be difficult to value and divvy up among multiple heirs, he takes out a permanent life insurance policy to ensure his children are provided for immediately after his death.

By using various methods of estate planning, Sarah and Neil are able to provide peace of mind for themselves and their loved ones.

"No matter your asset level or estate-planning needs, it's also smart to bring in a professional to help you anticipate potential issues," Susan says. "The last thing you want is for your estate plans to create unnecessary conflict after you're gone."

After any major life change, review and update your accounts, beneficiary designations, and estate-planning documents. View our estate planning checklist.

Coming together

"The joining of two lives is challenging under the best of circumstances, so when you add in financial and personal histories that span decades, it's ripe for marital and familial conflict," Susan notes. "But the more transparent you can be with your spouse about your needs and expectations, the more successful the union is likely to be."

In defense of prenups

Prenuptial agreements—contracts that list the assets and debts of each person and how they should be handled in the event of death or divorce—are sometimes seen as signaling a lack of trust in your future spouse.

However, for many, they can provide peace of mind, especially for children or other heirs who may worry that a new spouse is going to end up with what they believe should rightfully go to them.

What's more, the process of creating and sharing a prenuptial agreement can provide a couple with a forum to discuss many of the issues raised in this article and help foster more thorough estate-planning conversations—as well as communicate their wishes to their heirs.

Prenuptial agreements—contracts that list the assets and debts of each person and how they should be handled in the event of death or divorce—are sometimes seen as signaling a lack of trust in your future spouse.

However, for many, they can provide peace of mind, especially for children or other heirs who may worry that a new spouse is going to end up with what they believe should rightfully go to them.

What's more, the process of creating and sharing a prenuptial agreement can provide a couple with a forum to discuss many of the issues raised in this article and help foster more thorough estate-planning conversations—as well as communicate their wishes to their heirs.

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The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

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Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

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The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc. 

Schwab Wealth Advisory™ ("SWA") is a non‐discretionary investment advisory program sponsored by Charles Schwab & Co., Inc. ("Schwab"). Schwab Wealth Advisory, Inc. ("SWAI") is a Registered Investment Adviser and provides portfolio management for the SWA program. Schwab and SWAI are affiliates and are subsidiaries of The Charles Schwab Corporation

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