In this Episode of the Secure Your Retirement Podcast, Radon and Murs discuss retIn this Episode of the Secure Your Retirement Podcast, Radon and Murs discuss retiring before your spouse, walking through the specific decisions couples face with early retirement planning when one partner is ready to stop working and the other isn’t. This episode covers retirement planning for couples navigating that in-between stretch, including health insurance before Medicare, retirement income planning, and the retirement tax planning tradeoffs that come with a staggered retirement timing decision.

Listen in to learn about the three paths for health insurance before Medicare, why a written retirement income plan protects your future flexibility around Roth conversions in retirement, how Medicare and retirement timing intersect with Social Security planning, and the practical retirement checklist to work through once one spouse decides to retire, including what a 401K to IRA rollover actually involves.

In this episode, find out:

• The three health insurance before Medicare options when one spouse retires early and the other keeps working, and why the obvious choice isn’t always the cheapest one
• Why retirement income planning starts with a written plan, and how pulling from the wrong account today can limit your ability to do Roth conversions in retirement later
• How a drop in household income opens a retirement tax planning window, and why you have to pick a priority between Roth conversions, Social Security planning, and health insurance subsidies rather than optimizing all three at once
• What a 401K to IRA rollover really means once you retire. It’s a tax-free move, not a taxable event, and it opens up investment options beyond what most 401k plans offer, often with the chance to reduce the fees tied to those plans
• Why planning retirement isn’t only about retirement cash flow and taxes, and how thinking through the non-financial side helps you retire comfortably instead of just affordably

Tweetable Quotes:

“Can you put a dollar value to not having to worry about this stuff when you’re getting close to retirement?” — Radon Stancil

“The idea is before one of the two retire, understand what the impact of that’s going to be and how you’re going to play it out so that it’s really clear in mind.” — Murs Tariq

Resources:

If you are in or nearing retirement and you want to gain clarity on what questions you should be asking, learn what the biggest retirement myths are, and identify what you can do to achieve peace of mind for your retirement, get started today by requesting our complimentary video course, Four Steps to Secure Your Retirement!

To access the course, simply visit POMWealth.net/podcast.

Here’s the full transcript:

Murs, we were just talking with a couple of clients. And it’s something that is extremely common 

for us to actually talk to somebody. And we’ve got a couple, two people, and one is retiring and 

the other is not. And it was kind of funny. They talked about the fact that, you know, she was 

like, yeah, you know what I don’t like is whenever I get up in the morning and I go to work and he 

stays in the bed and sleeps in. And that’s the funny side. But there’s also some very logistical 

things to think about when it comes to this. Because if I’m, let’s just say I’ve got, 

you know, if I retire before my spouse and they’re still working, well, then how do I deal with 

healthcare benefits? Do I go on Medicare if I’m at Medicare age already? Or do I go on their plan? 

Like, what’s the best way to handle that? How do I deal with disbursements when it comes to, 

you know, do I need to, like, take some money from my savings to kind of complement or add to what 

my spouse has had? If my spouse is still working, do they have enough money to actually pay the 

bills, and do we live on that? So there’s all these questions that come around, and I would say 

that it’s pretty common that both people don’t necessarily say, 

I’m going to retire on the same day. Now, it is. you know, a thing that people think about and say, 

yeah, I’m going to work as long as you work and all those kind of things. But what are some of the 

things that you see that would be areas that we would need to talk through in the planning process 

when it comes to timing of retirement? So I think, first of all, I think regardless of who’s 

retiring first, you want to know that it’s possible to retire first before you go and pull that 

trigger. And to us, really what that is, is kind of, you know, having this plan in place of 

understanding. The assets that we’ve got, how we’re going to spend as we approach retirement, 

and then the investment strategy aligning with all of that. So, the ability to make that decision to 

retire all revolves around the plan. But then when you have that comfort of, yes, one of us is in a 

position to retire, there’s, I think, a lot of things that you’ve got to think about. But first, 

you’ve got to solve that thing of saying, hey, within the financial modeling, the plan itself, 

based off what we have, how we spend, and our ages. Are we in a position where one can retire 

before the other one does? And then what does that look like? So, I think we can start with just the 

first thing that comes to mind is the health care area, right? Because you’ve got someone that it 

could be a scenario where each person is on their own health plan based off of the benefits that 

they receive. It’s very common today where in the corporate world, you know, Health insurance is 

going to be covered for the employee at a full rate. That’s a really common thing to see. 

And so, there’s no reason to add your spouse on because they’re also working and they’re getting 

health insurance is covered at the full rate. But then when that one person does retire, now we’ve got 

to figure out, well, the retired person, let’s say they’re before the age of Medicare, how are they 

going to get health insurance? Are they going to tack on into the current? 

The spouse that is going to remain working, are they going to tack on to that plan? What does that 

look like? What’s the cost going to be there? Or does it make sense to look into private insurance 

through the ACA plans and things like that? And that in itself is a tough decision. 

And there’s also the ability to get on the COBRA with that employer that you’re leaving. So just 

those three options there opens up a whole lot of windows of analysis that needs to be done. 

Luckily for us, we’ve got Sean, and Sean is someone that… really just dives into your financials 

or I guess your health scenario of what you need, what options are available to you, and then let’s 

make a good decision based off of the evidence at hand. So, I think that’s a big one that does throw 

people. 

But the other one, Raden, is all around income. And if we’ve got two people, 

and let’s say each person makes $100,000 a year, and now one’s going to retire, right? So now 

we’ve had a drop of income. How do you handle that conversation? Yeah, I think this is, you 

know, one of the questions that we ask in our, we call it route to retirement. You know, you got 

risk optimized incomes. Number two in that route to retirement is the number one question we ask 

is, do you have a written income plan? And sometimes people go, 

why would I have a written income plan? Well, it becomes really important, especially in this kind 

of scenario. We think it’s important in all the different aspects, but a written income plan says, 

a lot of things. And if you think about it, it is a, I call it retirement focused financial plan 

attached to a written income plan. And it’s a moving living document. 

So, what we can do in that is we can say, okay, if one person retires, what income are they going to 

have? What’s the income of the still working spouse? Is there a gap? If there’s a gap, 

how do I want to pull the money out? Where do I take the money from? And that all needs to be 

coordinated. That’s not something that you would just like willy-nilly say, I’m just going to use 

money from the bank. And I’ll give you an example of that. Let’s say that you just say it’s as 

simple as I’m just going to use money from the bank. That could create another problem where I 

don’t have the ability now whenever the second spouse retires to actually have a Roth conversion. 

Right. Or at least opportunities for Roth conversions. A lot of times I want to hold that cash in 

the bank for those types of opportunities when I’m trying to take my income down really, really low. 

And so, I want to use non-taxable money in that scenario. So really thinking through and 

understanding how much income do I need? Where is it going to come from? What type of accounts? 

Because most people have a traditional IRA. Most people have a brokerage account that’s not a part 

of an IRA. And then quite a few people today have Roth IRAs. All different taxation on how we’re 

going to deal with those. And it’s really important to look at it for the plan of the retirement, 

not just year one, because that can make a year one decision and it could really affect me for the 

whole rest of my retirement. So, I think the idea is before ideal, ideal world, 

before one of the two retire, understand what the impact of that’s going to be and how you’re going 

to play it out so that it’s really clear in mind. Now, if you get one of those things where people 

get and they get in a… a package because they’re going to leave early and they’re going to get a 

year’s salary, well, that’s probably going to take care of your year. You’re not going to need that 

kind of stuff. But I think having a written income plan is extremely important for you to be able 

to understand it, see it, know exactly where to take it from, because it’s not as easy as just 

saying, I want to take money from one account. Now, the other thing that we have to start thinking 

about when we look at this idea of one spouse retiring before the other is the big word. 

The big word, taxes, and how that plays into it. So, kind of talk a little bit, if you don’t mind, 

a little bit about how we think about taxes, especially in this type of scenario. Yeah, so I think 

one thing I’ll come back to, this is kind of where income and taxes, I mean, they’re always 

intertwined. The more money you make, the more tax you’re going to pay in most cases. And so if 

your income goes down because of a drop of income, your tax scenario could get a little bit better. 

back to the idea of saving for a second here uh you know and cash flow right so if I’ve got the 

the couple that’s got a hundred that each person’s making a hundred thousand dollars a year 

they’re both maxing out their 401k one decides to retire and What could make a lot of sense, 

if the financial plan allows for no more future savings, because at this point, the one earning 

spouse is really there to cover the day-to-day expenses. And should they be saving any 

more into the 401k at this point? Because if you’re going to save into the 401k, but then the other 

spouse is going to pull out of their IRA to fund our cash flow needs, well, it’s a net zero. 

There’s no good effect there. So, kind of reevaluating, reassessing how much. Should we be saving at 

this point? Are we even able to save if we really need to cover our cash flows? Because looping in 

the tax part of it, the incentive is to put into the 401k, so you bring your taxation down. But 

cash flow is really the most important part of retirement planning at the end of the day. So, kind 

of going into taxes, there’s a lot of things to think about when we’ve got a drop of income, 

right? First of all, is the surviving income, I guess you could say, 

is that enough? Is that enough or are we going to have to start pulling from assets to make up for 

that income? Or then the conversation. uh comes around of when well maybe someone’s going to take 

social security earlier than they thought they would to make up for some income gaps which is all 

going to mess around with your taxation and so when it comes to tax planning and tax strategy 

Taylor on our team you know she would tell you this all day is that you got to kind of pick a 

priority of what you really want to be accomplishing here and if so, someone says well i really want 

to we’ve done a good job saving I’ve got a lot of 401k money i mean we just did the podcast the 

other week about That seems like everyone has over a million dollars in the 401k these days. And 

while that’s a great number, it’s also a big future tax problem. And so, a priority could be chosen 

of, well, since we’re cutting our income in half, it could make sense to replace that income 

through Roth conversions in the sense of let me utilize this drop of income to replenish it using 

tax brackets to get money from my IRA or my 401k into the Roth bucket. 

Well, if I’m going to make that my priority, like you said, I want to keep my income as low as 

possible. So, I don’t want to be drawing and creating capital gains tax and all this stuff because 

it’s going to reduce my ability to convert into the Roth IRA. That’s one. And so, you may say, 

I shouldn’t take Social Security at this point if we can manage without it. So, I’m not adding 

additional income. And then, you know, you can go in any direction here around taxes and, 

you know, trying to figure out health care. And then there’s subsidies on health care if you wanted 

to try to get your health care cheaper. But again, it comes to priority. Am I trying to 

maximize Roth conversions? If I’m trying to do that. I’m not going to get subsidies on health care. 

Or am I just trying to get very cheap, affordable health care for the spouse that just retired and 

it doesn’t make sense to go on the family plan? It makes sense to do it this way. Well, then maybe 

I can’t do Roth conversion. So, what’s the priority that we need to be working on with this whole 

new tax window, this whole new tax picture? And then there’s the whole aspect of retiring is a big 

deal to a lot of people. It should be. Hopefully you only retire once. And sometimes there’s, you 

know, money movements involved, paperwork involved, writing about whether you’ve got a pension that 

you’ve got to make an election on or you’ve got this 401k and you could care less about the 

investment options there. And now retirement allows, in most cases, for you to move that to an IRA. 

So, kind of take us through some of the logistics of what it really is to we’ve made that decision. 

One of us can retire. We’ve figured out the cash flow. We understand our tax picture. I’m retiring 

now. What do I need to be doing logistically? Yeah, I think there’s a few things. My brain goes 

toward, when I think about this, of what reality is, is I’ve most times been just working with a 

401k, and I was working, so that’s why I had my money there, and I was just saving money and making 

sure that it was put away properly. 

But now I’ve got an option that I can move my 401k to an IRA, and you might wonder, 

why would I do that? And I would say that the number one reason is, is that I have a lot more 

options with an IRA than I do a 401k. Sometimes people think because they’re in the company plan 

that they get a better deal somehow, and that’s not reality. 

The reality is in most 401k plans, I’m in mutual funds, 

and the mutual funds have expenses. I could get out of the 401k, and now I could go to all kinds of 

options. I could actually get rid of all those fees if I wanted to and not have to worry about 

that. Now, that’s going to take a little bit of movement. It’s not hard. There’s no taxes due on 

that. Sometimes people think that if I move my 401K to an IRA, it’s taxable. It’s not. It’s a tax 

-free move. And then. The idea is we’ve got to make sure we understand that if I move from the 401k 

to the IRA, how do I have my beneficiary set up? Now, if I’m still married and I’ve got kids, 

that’s going to be pretty clear cut. Most times people are going to put their spouse as their 

beneficiary and their children as the contingents. But then there’s also elements to start thinking 

about, like, well, when am I going to file for Medicare? Medicare is a big one. We have Sean in our 

office who is a Medicare specialist, and he walks all of our clients through that entire scenario. 

But the question is, when should I file for it? Should I go on my spouse’s benefits? What’s better? 

What’s the better economics? And by the way, if I turn 65, even if I’m going to go on my spouse’s 

insurance plan, I still need to file for my Medicare Part A just so I’ve got that part of 

everything done. So, there’s those checklists. I think there’s also it. Anytime we make a big change 

in life, it never hurts to say, where’s my estate plan? Where are things on that? Also, 

when I leave my employer, sometimes I will lose or be able to take my life insurance with me. 

So making a decision on that, what am I going to do about life insurance? I think once we get 

to this point as well, another thing that people start to think about is long-term care. Should I 

start thinking about that a little bit more seriously now? And how am I going to deal with its if 

something happens to one of us? You mentioned pensions. If you are so wonderful to have a 

privilege, fewer and fewer people are, how do I want to get that benefit? Do I want it to be 100% 

to me with a 50% survivorship, no survivorship, 100% survivorship? All that takes math and 

numbers to know what’s the best way to do that. So those are things to consider. And I say all 

this, and I’m not trying to scare anybody. I just want you to know there’s a lot to think about. 

The nice thing is we’ve got, like, very nice checklists. We’ve got things that we can help our 

clients provide to them so that they don’t miss anything and just not be overwhelming. 

On our book, The Peace of Mind Pathway, right in the front we’ve got a jumbled-up puzzle. 

And on that puzzle, we’ve got all the kind of questions that I just ask, you know, how should my 

estate plan be? When should I take this? When should I do that? And it feels overwhelming. So I 

would say work with somebody that can help you put the puzzle together. Get professional help that 

would help you put that puzzle together so you don’t have to worry about it. We were just talking 

to a client just today and he said, you know, I was talking to a friend of mine and I was like, 

hey, you should get help. And they said, but I think I can do as good of returns as another person 

could do, as an advisor could do. And he goes, you’re missing the point. 

Let’s just say it was the exact same return that you were getting over there. Even after their fee, 

you’re getting the exact same return, and you don’t have to worry about it. Can you put a dollar 

value to not having to worry about this stuff when you’re getting close to retirement? And I think 

that’s the thing to think about. And so, kind of on that topic, we’ve talked about. But what about 

the non-financial issues? You know, what about those kind of things? Yeah, that’s big stuff. I 

mean, there’s so many stories about somebody retiring earlier than the spouse. 

And maybe it’s a scenario where one spouse worked from home and the other one was kind of 

constantly on the road, right? And so, they… weren’t living together every single day or they were 

just so busy that, you know, you weren’t spending hours and hours together. But now all of a sudden 

you’ve got one spouse working like the example you gave that she was a little bit annoyed that he, 

you know, she would get up and go to work, and he would still be lying in bed, right? So they were 

jokingly talking about that one with us. And so, it’s kind of having that conversation and that 

understanding of there’s a big life change that’s about to happen and how are we going to handle 

this? How are we going to maneuver this? And then when they both finally retire, it becomes a whole 

other conversation again of, well, we don’t have the nine to five. We don’t have these requirements 

that we have to do every single day and get up and go to work. And so now it’s really just us now. 

And we got to kind of relearn how to live together for 24 hours a day versus, you know, half of 

your day was working. And so, non-financial stuff is a big transition for a lot of people. 

The other thing I think people want to be considering and thinking about when it comes to 

retirement is I think way too often people get to a place of retirement, and they hit the number and 

they’re like, yep, I can do it. And we say, hey, what are you going to do? And they’re like, I 

don’t know. I have no idea what I’m going to do. So, I think when you are approaching this idea of 

retirement, you want to start to. kind of just take some time to dream a little bit about it. 

Because what we would be asking as financial planners is, well, what are you going to do? We need 

to know that just because of the numbers behind it. And can you afford to do these things like the 

travel or buying that second home or, you know, gifting to your kids and grandkids and all that 

stuff or picking up the big hobbies? You know, golf’s a common one. Even pickleball today is a 

really common one of hobbies people want to pick up. And nothing is free anymore. Unfortunately, 

they all cost something. So understanding what is my next new thing going to be once I don’t have 

this commitment of work and this thing that has been my identity for 30, 40, 

50 years, that’s gone now. What’s going to get me up every single day to enjoy this next phase of 

my life? And so thinking through that before you get to it gets you excited about retirement, gets 

you excited to finally cash that last check and be like, I’m done and I know exactly what I’m going 

to do now. And so that’s, I think, another big piece of that can sometimes get ignored of, 

hey, just get me there, help me retire. And then, you know, I’ll figure it out. I’m pretty good at 

sitting on the couch. Right. And we know from studies around all of that, that involvement and 

engagement and physical activity and all that stuff matters so much when you do retire and you 

don’t want to overlook that type of stuff either. Yeah. So obviously we’ve talked about a lot of 

stuff. So if you’re listening to this and you think, man, I would. Love to be able to work all this 

out, have a written income plan, look at all those things.