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Retiring Early As a Couple: A Financial Love Story

Retiring Early As a Couple: A Financial Love Story

February 05, 2024

Retiring early as a couple is a goal shared by many, and if planned comprehensively, it may provide opportunities for travel, passion projects, and more quality time together. Retiring simultaneously can bring many benefits, such as shared experiences and time together, which may result in a stronger bond.

However, it is essential to note that simultaneously retiring means that the couple may stop earning money around the same time, which can impact their income and savings. For this reason, couples must have a plan outlining a systematic approach to saving, spending, and investing. It's also critical to include factors such as their individual and collective needs and goals to ensure that both partners are on the same financial page. As they work toward their goal of retiring early, they must consider these areas as they plan together to work toward their early retirement goal.

Identifying suitable account ownership

When considering the financial intricacies of retirement planning, it is crucial to remember the potential benefits of both joint and separate accounts. Many couples opt for a combination of these two types of accounts.

Joint accounts are commonly used for shared expenses like utility bills, mortgages, groceries, and shared savings goals, such as joint retirement funds. Having a joint account can streamline transactions of these obligations, creating a sense of financial cohesion within the couple.

Conversely, separate accounts are beneficial for maintaining individual financial independence. Separate accounts can be used for personal expenses or personal savings goals. In retiring early, having different accounts may be particularly useful when one partner must retire before the other due to health reasons or age differences.

The FIRE movement

The Financial Independence Retire Early (FIRE) movement is one approach that has been gaining popularity amongst couples aiming for early retirement. The FIRE movement advocates for intense savings and frugality to achieve financial independence and retire early; hence the name – Financial Independence, Retire Early.

The principles of the FIRE movement focus on frugal living, aggressive saving, and investing in low-cost, passive funds, suggesting savings rates that can be higher than 50% of the income. The objective is to build a nest egg large enough to support living expenses without needing further employment. Implementing the FIRE movement's principles may help couples work toward their goal of early retirement.

Tips to work toward simultaneous retirement

Retiring early as a couple and striving for financial independence is attainable with careful planning and consideration of both joint and separate accounts, along with following the principles of the FIRE movement.

Here are some other tips to help couples work toward their goal of retiring at the same time:

  • Follow a budget
  • Consider passive income strategies
  • Work with a financial professional
  • Maintain a healthy lifestyle

For many couples, the benefits of retiring early and simultaneously are worth considering. Each couple is unique in their financial situation and goals, and by planning accordingly, early retirement can be pursued. It all comes down to financial discipline, prudent planning, working with a financial professional, and being on the same financial wavelength with your partner.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by Fresh Finance.

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Sources:

https://www.investopedia.com/terms/f/financial-independence-retire-early-fire.asp