When people think about retirement income planning, the first question is often straightforward: Will I have enough income to support the retirement I want?
But the answer can look very different depending on whether you are retiring as a single person or as part of a couple.
For a single retiree, there is generally one financial life to plan around. There may be Social Security, a pension, retirement accounts, investments, and other resources that need to support one person's lifestyle for an uncertain period of time.
For couples, there is another layer to consider. A retirement plan needs to support two people while they are both alive—but it may eventually need to support one of them for many years after the first spouse dies.
That distinction is important because income doesn't necessarily decline at the same rate as expenses after the death of a spouse.
A couple can enter retirement with plenty of income and little or no apparent shortfall, yet the surviving spouse could face a very different financial picture later.
That is why a retirement income plan shouldn't only answer, “Does our plan work today?”
It should also ask, “What happens if either one of us eventually has to continue this retirement alone?”
Start by Understanding Your Retirement Income Gap
One of the fundamental concepts in retirement income planning is the income gap.
Simply put, your income gap is the difference between the amount of money you expect to need for your lifestyle and the reliable or recurring income available to help support it.
Imagine a retired couple wants approximately $10,000 per month to support their lifestyle. If Social Security and pensions provide $7,000 per month, there is an approximate $3,000 monthly income gap that needs to be addressed through portfolio withdrawals or other resources, before considering taxes and other planning factors.
Understanding that gap helps answer an important question: How much of our lifestyle will depend on our investments?
For a single retiree, calculating the gap may be relatively straightforward. For a couple, however, there may actually be several different income gaps to consider.
There is the gap while both spouses are alive.
Then there is the potential gap if the first spouse dies.
And depending on which spouse dies first, those numbers may be different.
A Couple May Have No Income Gap Today and Develop One Later
This is one of the issues we believe couples should pay particular attention to.
Suppose a couple enters retirement receiving two Social Security benefits and a pension. Combined, those income sources cover most or perhaps even all of their expected expenses.
On the surface, their retirement income plan may look very comfortable.
Then one spouse dies.
The household generally will not continue receiving two full Social Security retirement benefits indefinitely. Depending on the circumstances, a surviving spouse may be eligible for a survivor benefit, but Social Security generally pays the higher applicable benefit rather than continuing both benefits in full.
The pension may change too. Depending on the pension and the election made at retirement, the surviving spouse might receive the same pension amount, a reduced survivor benefit, or potentially no continuing pension benefit at all.
Meanwhile, household expenses typically don't fall in half.
There is still a home to maintain. Property taxes, insurance, utilities, transportation, healthcare, and many other expenses remain. The surviving spouse may still want to travel, spend time with family, pursue hobbies, and maintain a similar lifestyle.
The result can be something that wasn't apparent on the first day of retirement: a survivor income gap.
And if the surviving spouse lives another 10, 15, or 20 years, that gap can become an important part of the overall retirement plan.
Couples Should Consider More Than One Retirement Scenario
Instead of running only one retirement projection, couples may benefit from evaluating three different possibilities:
- What does our income plan look like while we're both alive?
- What happens financially if one spouse dies first?
- What happens if the other spouse dies first?
The last two scenarios aren't necessarily interchangeable.
One spouse may have the larger Social Security benefit. One may have a pension. There may be an age difference between spouses. Health and longevity expectations may differ. Life insurance, retirement accounts, or other assets may also be structured differently.
The objective isn't to predict who will die first or when that will happen.
It is to understand whether the surviving spouse would have sufficient resources to maintain the lifestyle the couple is planning for today.
Social Security Is Also a Survivor Planning Decision
Social Security is a good example of why retirement income planning can be different for couples.
When both spouses are alive, there may be two Social Security benefits coming into the household. After the first spouse dies, the surviving spouse may qualify for a survivor benefit based on applicable Social Security rules. In general, the survivor does not simply continue receiving both full benefits.
That means Social Security claiming decisions can potentially affect more than the income a couple receives during the early years of retirement.
They may also affect the income available to the surviving spouse later.
This doesn't mean there is one Social Security claiming strategy that works for every couple. Health, longevity, employment, taxes, other assets, age differences, and personal preferences can all influence the decision.
The important point is that a couple's Social Security strategy should consider both lifetimes, not simply which claiming decision produces the most income today.
Pension Decisions Can Have Long-Term Consequences
Pensions can create a similar issue.
Depending on the plan, someone retiring with a pension may have choices regarding how the benefit is paid. A single-life option might provide one level of income during the employee's lifetime, while a joint-and-survivor option may provide a different initial benefit in exchange for continuing some amount to a surviving spouse.
The specific choices vary significantly by pension plan.
When evaluating those options, it can be tempting to focus primarily on the size of the first monthly check.
But the more important planning question may be: What happens to our household income if the person receiving this pension dies first?
For some couples, maintaining survivor income may be particularly important. For others, investment assets, insurance, age differences, health, or other resources may influence the decision differently.
Because pension elections can sometimes be difficult or impossible to change after retirement, understanding the survivor implications before making an election can be especially important.
The Surviving Spouse's Tax Picture May Change Too
The death of a spouse can change more than household income.
It may eventually change the household's tax situation as well.
After applicable transition periods and depending on individual circumstances, a surviving spouse may ultimately move from married filing jointly to another filing status, potentially including single. Tax brackets, deductions, Medicare-related costs, required distributions, and other tax considerations can therefore look different for one person than they did for the couple.
Tax rules change and individual circumstances vary, so these issues should be evaluated with an appropriate tax professional.
The broader planning point is that the surviving spouse could potentially experience lower household income without a proportionate reduction in expenses—and a different tax environment at the same time.
That is why survivor planning should be incorporated into the retirement income strategy rather than treated as a separate estate-planning issue.
Long-Term Care Can Affect Both Spouses' Retirement Plans
Long-term care introduces another important difference between planning for a couple and planning for one person.
Imagine one spouse develops dementia or another condition requiring significant care while the other remains relatively healthy.
The household may suddenly be supporting two different financial needs simultaneously: the cost of care for one spouse and the ongoing lifestyle of the healthy spouse.
If significant care expenses are paid from investment assets, those withdrawals may reduce the resources available to support the healthy spouse later in retirement.
That is why we often think about long-term care planning as being about more than the person who may eventually need care.
It can also be about protecting the financial well-being of the other spouse.
Couples may want to consider where each person would prefer to receive care, what role they expect the other spouse to play, how much family caregiving is realistic, what professional care might cost, and which resources could be available to help fund it.
Retirement Income Planning for a Single Person Has Different Challenges
A single retiree doesn't necessarily need to model the financial impact of a spouse dying.
But that doesn't mean retirement income planning is simpler.
A single person generally has one Social Security benefit, one financial household, and one pool of resources supporting the plan. There isn't a second spouse's income or assets available to absorb an unexpected financial event.
There may also be no spouse to step into a caregiving role.
That can make long-term care planning particularly important. A single retiree may need to think not only about how care would be funded, but also who would help coordinate it.
Who would advocate for you if you couldn't advocate for yourself? Who would help manage your finances? Who would communicate with healthcare providers? Who holds your financial power of attorney and healthcare directive? Do those people understand what you would want?
For someone retiring single, those questions can be every bit as important as determining an appropriate portfolio withdrawal strategy.
Single Doesn't Always Mean Never Married
There is another reason this distinction matters.
Many people who spend part of retirement single didn't necessarily begin retirement that way.
Someone may enter retirement married at 65, lose a spouse at 75, and live another 15 or 20 years.
In that situation, the couple's retirement income plan eventually becomes a single person's retirement income plan.
That is why we believe survivor planning deserves attention even when both spouses are healthy at the beginning of retirement.
The question isn't simply whether you can afford to retire together.
It is whether the financial resources you've accumulated can reasonably support both of your lives, however those lives unfold.
Your Spending Plan Should Reflect the Difference
One mistake in retirement planning can be assuming that one person's lifestyle will cost half as much as two people's.
Some expenses will certainly decline after the death of a spouse. Food, travel, entertainment, and certain healthcare expenses may change.
But many fixed costs remain.
A surviving spouse may continue living in the same home, paying the same property taxes and maintaining the same car. Insurance, utilities, home maintenance, subscriptions, and other costs may not change substantially.
The surviving spouse may also need to pay for services previously handled by the deceased spouse.
If one spouse handled home repairs, taxes, investments, transportation, or other responsibilities, replacing some of those activities may introduce new costs.
Rather than assuming expenses simply decline by a certain percentage, a thoughtful retirement income plan can model what the surviving spouse's lifestyle might realistically look like.
Estate and Financial Organization Become Part of the Income Plan
For couples, there is also a practical side to survivor planning.
Does each spouse understand where the money comes from?
If one spouse has historically handled the finances, does the other know where accounts are held, how bills are paid, who the financial professionals are, what insurance exists, and how retirement income is generated?
The financial plan can work perfectly on paper and still create significant stress if the surviving spouse doesn't understand how it works.
For single retirees, organization can be equally important because someone else may eventually need to step in.
Keeping accounts, insurance information, estate documents, professional contacts, and other important financial information organized can help make that transition easier for whoever may eventually be responsible.
Questions Worth Asking
Whether you are approaching retirement alone or with a spouse, consider asking:
- What is my retirement income gap today?
- If we're married, what happens to that gap after either spouse dies?
- How much Social Security income would remain for the survivor?
- What happens to pension income after the pension recipient dies?
- Which household expenses are likely to remain relatively fixed?
- Could the surviving spouse maintain the lifestyle we're planning for?
- How would a significant long-term care event affect the other person's financial security?
- If I'm single, who would help manage my finances or coordinate care if I couldn't do it myself?
- Are our estate documents, beneficiary designations, and financial information organized?
- Does each spouse understand the retirement income plan?
These questions can help turn a retirement projection into a more comprehensive retirement income strategy.
Frequently Asked Questions
Is retirement more expensive for a single person or a couple?
There is no universal answer. A couple has expenses for two people, but they may also have two Social Security benefits, multiple retirement accounts, pensions, and other resources. A single retiree has one person's expenses but may also have fewer income sources and no spouse to share fixed household costs or caregiving responsibilities.
What happens to Social Security when one spouse dies?
A surviving spouse may qualify for Social Security survivor benefits depending on age, benefit history, and other circumstances. Generally, the survivor does not continue receiving both full benefits; the applicable survivor rules determine what benefit remains. Because individual circumstances vary, couples should review their specific Social Security options before making claiming decisions.
What happens to a pension when one spouse dies?
It depends on the pension plan and the benefit election made at retirement. Some elections provide continuing survivor income while others may provide reduced or no continuing benefits. Review the actual pension plan and available elections before making a decision.
Why is long-term care planning different for couples?
If one spouse requires significant care, the couple may need to fund that care while continuing to support the healthy spouse's lifestyle. Care expenses can therefore affect the financial security of both people.
What should a single retiree consider about long-term care?
In addition to how care would be funded, single retirees may want to identify who could help coordinate care, manage finances, communicate with healthcare providers, and make decisions if they become unable to do so themselves.
Key Takeaway
Retirement income planning isn't simply about determining whether you have enough money on the day you retire.
For couples, the plan should consider two lives together and potentially one life afterward.
A couple may have little or no income gap when retirement begins because two Social Security benefits and a pension cover much of their spending. But after the first spouse dies, Social Security income may decline, pension income may change, taxes may look different, and household expenses may not fall proportionately.
That can create a retirement income gap that didn't exist before.
For a single retiree, the challenge is different. There may be fewer income sources, no spouse to share fixed expenses, and no automatic caregiver or financial decision-maker if health declines.
Neither situation is inherently better or worse.
They simply require different planning.
Final Thoughts
At Cypress Wealth Services, we believe a retirement income plan should be designed for more than the first few years of retirement.
Retirement can last decades, and life will change during that time.
For couples, one of the most valuable exercises can be looking beyond the comfortable picture created by two Social Security checks, pensions, and investment assets and asking what happens when one person eventually has to continue the plan alone.
For someone retiring single, the conversation may place greater emphasis on creating sufficient income flexibility, preparing for long-term care, organizing financial affairs, and identifying trusted people who can step in if assistance is eventually needed.
You cannot know exactly how retirement will unfold.
But you can build a plan that acknowledges that your household, income, health, and needs may change along the way.
And sometimes the most important retirement income question isn't simply “Do I have enough today?”
It is “Will this plan continue to support me—or my spouse—when life looks different than it does today?”
About the Author
Jim Bray, CFP®, is Managing Director and Senior Financial Advisor with Cypress Wealth Services. As a CERTIFIED FINANCIAL PLANNER™ professional, Jim works with individuals and families navigating retirement, wealth management, retirement income planning, and long-term care considerations. His approach emphasizes comprehensive planning and helping clients understand how decisions involving income, investments, healthcare, family, and longevity can work together throughout retirement.
Retire With Confidence and Clarity is an educational series focused on helping individuals and families navigate retirement planning decisions with greater understanding and purpose.
This article is provided for general educational purposes only and should not be construed as personalized investment, tax, legal, Social Security, pension, insurance, or financial planning advice. Social Security benefits, pension provisions, tax treatment, healthcare and long-term care costs, and retirement income needs vary based on individual circumstances and may change over time. Pension elections and survivor benefits are governed by the applicable plan documents. Individuals should review their specific circumstances with appropriate financial, tax, legal, and other qualified professionals before making financial decisions.
