Retirement Calculators for Couples: Plan Together, Retire Happily

Retirement planning for couples can be complex but also exciting. Whether you’re dreaming of traveling the world together or just settling down to enjoy a comfortable lifestyle, using a retirement calculator tailored for couples is key to making your shared retirement vision a reality. In this post, we’ll explore everything you need to know, from tax considerations to survivor benefits, to help you and your partner retire in sync—no matter where you live.

Why Use a Retirement Calculator for Couples?

Retirement calculators for couples are designed to account for the unique financial dynamics of a two-person household. Factors like dual incomes, different retirement ages, and joint savings require a different approach from the traditional, individual-focused retirement tools. By using calculators that accommodate couples, like our very own Retirementize, you can map out a plan that reflects your shared goals, while also optimizing your tax situation and withdrawal strategies.

Key Features of a Couples Retirement Calculator

Couples’ retirement calculators typically include features like:

• Joint income streams (401(k), Social Security, RRSPs, CPP, etc.)
• Spousal benefit options (Social Security, CPP survivor benefits)
• Customized timelines for different retirement ages
• Tax optimization strategies for withdrawals

These calculators, especially tools like Retirementize, allow you to visualize different scenarios based on your unique situation. Want to see how early retirement affects your combined income, or how inflation impacts long-term goals? Retirement calculators for couples can show you just that.

Income Sources for Couples in Retirement

As a couple, you likely have multiple income streams to manage. It’s essential to factor these into your retirement calculations for an accurate picture of your financial future. Common income sources include:

• Pensions (both public and private)
• 401(k) in the U.S. and RRSP in Canada
• Social Security in the U.S. or CPP in Canada
• Rental properties or other passive income (Check out our guide on rental properties as a retirement income source!)

Coordinating the timing of when to tap into these resources can significantly impact your tax burden and overall income. Using a tool like Retirementize, you can experiment with different withdrawal strategies to find the most tax-efficient plan.

Tax Considerations for Couples: U.S. vs. Canada

Tax considerations vary depending on where you live, and for couples, coordinating withdrawals can be particularly tricky. Let’s break it down for both the U.S. and Canada.

United States

In the U.S., managing taxes in retirement often involves strategic withdrawals from accounts like 401(k)s, IRAs, and Roth IRAs. Couples can take advantage of tax brackets by spreading out their income and using Roth conversions to lower future tax obligations. Don’t forget about traditional IRA withdrawal rules and the impact of Required Minimum Distributions (RMDs).

Canada

In Canada, taxes work a bit differently. Withdrawals from RRSPs and RRIFs are fully taxable as income, but there are opportunities for couples to save. Income splitting allows retirees to shift part of their income to a lower-earning spouse, reducing their tax bill. You’ll also want to consider the tax-free growth potential of a TFSA.

For more tax tips, check out our blog post on RRSP withdrawal tax calculator.

Handling Different Retirement Goals Between Spouses

It’s not uncommon for spouses to have different visions for retirement. One might dream of retiring at 55 with $500K (check out our blog on retiring early), while the other prefers to keep working until 65. How do you reconcile these differences?

Using a couples retirement calculator can help. These tools let you input different retirement ages and model what happens when one spouse retires earlier or later. You can also compare income levels at different stages to see if both partners' needs are met financially.

Divorce and Retirement Planning: U.S. vs. Canada

Unfortunately, divorce is a reality that can significantly affect your retirement plans. Divorce rates in those over 50 have doubled since the 1990s, according to a study from the Pew Research Center.

United States

In the U.S., retirement assets like 401(k)s and IRAs are typically divided under a Qualified Domestic Relations Order (QDRO). Additionally, a divorced spouse may be eligible for up to 50% of their ex-spouse's Social Security benefits if they were married for at least 10 years.

Canada

In Canada, pensions, RRSPs, and CPP credits are divided between ex-spouses. The division of CPP credits can reduce future retirement income, so it's crucial to use a calculator like Retirementize to adjust your retirement plan after a divorce.

Survivor Benefits: When a Spouse Passes Away (U.S. and Canada)

The loss of a spouse can have a profound impact on retirement plans. Fortunately, both the U.S. and Canada offer survivor benefits to ease the financial burden.

Typically, defined benefit pensions in the U.S. and Canada often have a survivor benefit, sometimes as much as 50% of your spouses original pension. And it will likely adjust with inflation.

United States

In the U.S., Social Security provides survivor benefits that allow the surviving spouse to receive a portion of their late partner's Social Security income. Typically, the surviving spouse can choose between their own benefit or their deceased spouse's benefit, whichever is higher.

Canada

Canada offers CPP survivor benefits that provide income to the surviving spouse. The surviving spouse can receive up to 60% of the deceased’s CPP, which is crucial for maintaining financial stability in retirement.

To learn more about how to factor these benefits into your retirement plan, visit our blog on What is CPP?

Popular Retirement Calculators for Couples

When planning for retirement as a couple, it's essential to find calculators that take both partners into account. Not all calculators are designed with couples in mind, but many top retirement calculators now offer features to help dual-income households or those planning to retire together. Let's look at some of the best calculators available today, highlighting those that cater to couples and those that may not be as useful for joint retirement planning.

Retirementize – A Couple's Best Friend

Retirementize is specifically designed for couples planning their financial future together. It offers features like joint income projections, tax strategy optimization for two people, and withdrawal strategies tailored for different retirement timelines. Retirementize allows you to plan for one spouse retiring earlier, helping you strategize around Social Security, 401k, or RRSP withdrawals at different times. This makes it a go-to tool for couples looking to maximize their retirement savings together. The best part about this calculator is that it is fully-featured and FREE!

NewRetirement (Boldin) Calculator

The NewRetirement Calculator is one of the most popular tools, offering highly detailed retirement planning for individuals and couples. Unfortunately, the features needed to optimize a couple's retirement plan are NOT free. (Sorry Canadian's, the NewRetirement calculator doesn't work for you.)

T. Rowe Price Retirement Income Calculator

T. Rowe Price’s Retirement Income Calculator allows you to input both partners' information and project how long your savings will last. This calculator takes into account Social Security benefits for both spouses, making it ideal for couples. It also allows you to factor in different retirement ages for each partner, making it versatile for planning a staggered retirement.

Canada’s PERC Tool – Designed for Canadians

For Canadian couples, the Personal Enhanced Retirement Calculator (PERC) is a government-provided tool that helps estimate retirement income based on contributions to the Canada Pension Plan (CPP) and Old Age Security (OAS). It's especially useful for couples, as it allows both partners to input their information and provides projections on joint CPP and OAS benefits. PERC also helps Canadians explore strategies like pension splitting, delaying benefits, and maximizing income for both partners in retirement. While it’s a helpful tool for Canadian-specific scenarios, it lacks the depth of tax-efficient withdrawal strategies and investment projections offered by more comprehensive tools like Retirementize.

Dave Ramsey Retirement Calculator – Lacking a Couples Option

The Dave Ramsey Retirement Calculator is known for its no-frills approach, focusing on straightforward retirement projections. However, it does not offer an option to calculate for couples, which could limit its usefulness for those planning joint retirement strategies. If you're looking for more complex scenarios like tax-efficient withdrawals for two, this calculator might not provide the depth you need.

Other Calculators to Consider

• Fidelity Retirement Score: Great for individuals, but lacks a couples-specific option.
• Personal Capital: Offers excellent tools for tracking investments but lacks a deep focus on couples’ retirement scenarios.
• AARP Retirement Calculator: Caters well to both singles and couples, offering options to input joint Social Security benefits and different retirement ages.

While some calculators cater to individuals, those designed for couples, like Retirementize, T. Rowe Price, and Vanguard, make a significant difference by offering features that address the unique financial needs of two people planning retirement together.

Fun Facts

Conclusion: Plan Together, Retire Happily

Retirement planning for couples can be complex, but it’s also rewarding. Using a retirement calculator specifically designed for couples, like Retirementize, can make the process easier by helping you account for tax considerations, survivor benefits, and differing retirement goals. Whether you're in the U.S. or Canada, make sure to review your plans regularly, align your financial goals, and secure your future together.

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