Morningstar: Retirement Planning Needs Customization for Single-Income Couples

Couples who rely on a single income need a more customized approach to retirement planning, moving beyond one-size-fits-all strategies, according to Morningstar experts Christine Benz and Valentina Djeljosevic.

These couples should look beyond their immediate household budget and plan for the future, considering how to fund retirement on one income. They should also consider the challenges for a spouse re-entering the workforce after a period of absence, suggesting options like part-time work to maintain skills.

To avoid falling behind, it's crucial to consistently fund retirement plans, at minimum meeting employer matching contributions. Additional contributions to 401(k)s and IRAs are recommended. Benz also suggests "reverse budgeting," where savings goals are set first, allowing flexibility with remaining funds for those on tighter budgets.

For single-income families, establishing an emergency fund covering a full year of anticipated spending is vital due to increased financial fragility. These liquid reserves should be kept separate from retirement accounts to avoid taxes and penalties. Potential secondary sources like life insurance cash value or home equity lines of credit can also be considered.

Regarding Social Security, the goal for single-income couples is to maximize lifetime benefits for both partners. Often, delaying benefits for the primary, older earner can result in a larger survivor benefit for the remaining spouse.