Remarriage in retirement: What to consider before saying ‘I do’

THEY SAY LOVE IS SWEETER the second time around. What they don’t tell you is that it can also be a lot more complicated financially — especially for those couples who find one another later in life. The vow “for richer, for poorer, in sickness and in health” takes on new meaning when the newlyweds are retired.

When romance blossoms later in life, couples typically come together with two sets of assets, separate homes and family commitments — and often very different financial priorities. Melding all of these can be a challenge. So much so, in fact, that a growing number of couples ages 50 and older are simply living together without the benefit of marriage and keeping their financial lives separate. Still, tying the knot remains the popular choice. While the remarriage rate among Americans younger than 34 declined by about 50% between 1990 and 2018, it has remained relatively stable for previously married adults ages 55 to 64 during the same time period, according to the National Center for Family and Marriage Research at Bowling Green State University.¹

There are pluses and minuses either way from a financial perspective, says Debra Greenberg, director, Investment Solutions & Personal Retirement, Bank of America. “The key is to make sure that you’ve familiarized yourself with the rules governing such things as Social Security, estate planning and health insurance as they apply to your situation.”

Here are several issues to consider. “Talking them over before you walk down the aisle can help make the journey ahead much smoother,” Greenberg says.

For richer, for poorer…

The first and most basic question is whether you want to combine your financial assets and estate plans. For older couples who plan to remarry, 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. “A prenup can help ensure that both parties don’t lose control of the assets they brought to the marriage,” Greenberg says.

Deciding what to do with assets accumulated during the marriage is another issue that a prenup can help you control. Some states treat anything 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. Work with a lawyer and a financial advisor to draft a prenup that addresses all of your needs and concerns. For couples who choose not to marry, a cohabitation agreement can provide some of the same protections.

When it comes to weighing the financial aspects of remarriage, another often confusing area is Social Security. It’s important to understand how a remarriage can affect what you’ll receive, Greenberg says. As just one example, if your first marriage lasted 10 years or longer, you’ve been divorced for two years, you are single and your former spouse is eligible to collect benefits, you’re allowed to collect reduced spousal benefits based on their earnings record as early as age 62 or full spousal benefits at full retirement age (age 65-67 based on your date of birth). If you remarry, your spousal benefit would be based on your new spouse’s earnings record, which could result in a higher or lower spousal benefit.

It is also important to consider the impact of marriage on survivor benefits. Individuals who remarry before age 60 (age 50 if disabled) should keep in mind that they stand to lose their future survivor benefits from their prior marriage. “Because there are so many factors to be weighed, you should check with the Social Security Administration to ensure that you are receiving the highest benefit possible,” Greenberg says.

In sickness and in health…

If one partner lacks good health insurance, getting married can provide the opportunity to sign up for spousal coverage, Greenberg says. And even if both of you have insurance, it may be possible for married couples to get a better rate.

The key health issue that every older couple should consider, though, is the impact that a prolonged illness or an injury could have on their savings, Greenberg says. More than half of all Americans will eventually require some form of long-term care, and most insurance plans, such as Medicare, limit coverage of such things as residence in a nursing home. “That’s why, at this age, it’s more important than ever to have a plan to prepare for a health crisis,” she says.

Till death do us part…

Later marriages don’t just involve the two spouses. Often, they consist of a merger of families complete with grown children from previous marriages, and maybe even grandchildren — all of which can complicate inheritance issues, Greenberg says.

For example, many states have “elective share” laws, which automatically entitle spouses to a fixed share of a deceased spouse’s assets, regardless of what is stated 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 setting up trusts that provide separately for children from previous marriages, Greenberg suggests. Because trusts can specify beneficiaries, they help to head off potential conflicts down the road, such as inheritance disagreements between children and a stepparent.

“Another simple but important step that many couples forget,” adds Greenberg, “is remembering to change their beneficiaries on their insurance policies, their retirement plans and other important documents after they remarry.”

Marriage is a big step that involves significant change. That’s even truer for people who remarry later in life, notes Greenberg. Communication is key to navigating these changes together. Even if you maintain separate assets, be sure to talk about and align your financial plans so that they can help you achieve the things the two of you have decided are most important, she says. That way, you can get a good start on a second chance at marital bliss.