Now that my car loan is paid off, I’m finally starting to let go of my financial past, and look ahead towards the future. Bryan and I are beginning to discuss our plans, and how we’ll begin combining our finances. We’re talking about our hopes and dreams, both long-term and short-term: Vacations. Buying a Home. Retirement.
It’s hard to deny that we’re starting out on uneven ground. Bryan sees himself as being painfully behind. He has a smattering of credit card debt, and a car loan. At the end of the Summer, he’ll likely be trading one car loan for another. He has no savings to speak of. He doesn’t own any assets. Losing his job several years ago took a major chunk out of his annual salary, and left him back in a seasonal career that is extremely weather dependent. He’s never learned how to tell himself no, and struggles to control his spending. And, like so many people, he fears money: A lifetime of financial failures have left him feeling as though he isn’t “smart enough” to gain control of his financial future. Only the smart and rich get ahead. The rest just keep their heads down and try to survive.
Bryan looks at the progress I’ve made over the last few years, and views me as some sort of financial genius. I try not to trivialize his fears, while convincing him of the great things we can accomplish together. Over the past couple of years, we’ve slashed both of our living expenses dramatically, while still living a life we both enjoy. We eat at restaurants. Have drinks with friends. Take vacations. And yet we never have to worry about being able to afford our cost of living. When he isn’t working, I can easily pickup the extra expenses. We talk about everything, and he sees how I’ve been able to pay off a large amount of debt, and even set some money aside, despite the fact that I make $10,000-20,000 less per year than he does (even with all of his layoffs).
Bryan feels as though he is starting again with nothing. But the reality is, there’s something he has that is worth a tremendous amount: A fully funded pension, which he can claim at any time.
After 30 years in a union, Bryan has reached the age where he can begin considering retirement. But, like many pensions, the information that is readily available is intentionally vague. I often feel like they give minimal information so that people won’t be able to maximize their benefits.
If Bryan were to stop working now, but wait to claim his pension until age 62, his benefit would be $5,000 per month. That isn’t hugely different from what he’s making now. Plus, he’s at an age where he can assume he’ll be able to get something from Social Security. Unlike some other union pension plans that have been in the news recently, his pension is solidly “in the green”, meaning the total value of the pension is capable of covering future distributions. I still don’t love having all of his “eggs in one basket”, so it’s something we’re keeping in mind for the future.
Bryan became eligible to take an early retirement a couple of years ago. If he decided to retire before age 62 (full retirement age), he’d lose 3% for every year until his 62 birthday. So, if he retired this coming January, when he turned 58, he’d lose 12% of the $5,000. Of course, every hour that he works between now and then adds to his pension, so the total amount before the discount would be more than $5,000 by then. Even with the discount, it’s still a livable amount.
Oddly enough, I feel the weight of that pension constantly. It’s like a dark cloud hanging over me. Bryan feels insecure about his current financial position. I feel insecure about my future. I see Bryan’s debt as a temporary issue: After all, I paid off $17,400 on my car loan over one year on my own. If we join forces, we could easily knock out all of his debts in a very short period of time. Covering layoffs? No big deal! Buying a house? Pffffth! Our combined income is more than enough to wipe out his debts, cover our needs, and most of our wants.
In a year or two, Bryan could be in a great position to retire: No consumer debt. Large pension. Small living expenses. He talks about becoming a snow bird, even before he retires. After all, his layoffs would allow for it. We’ll travel to Florida every year. Or Arizona. Or maybe even South Carolina. And it will be great!
And that’s when I feel the weight of our age difference, and all the financial decisions I’ve made up to this point. We could easily live on his pension alone. But then what? I’m 20 years younger, which means I’ll likely have 20 years of life after he’s gone. I look at my $21,000 401(k), and feel woefully unprepared. Even if allowed to grow for the next 20-30 years, it won’t be enough to support me in the future. Accounting isn’t exactly a “snowbird” friendly career. What if his health fails, and I need to take time off in the future to care for him? Rejoining the workforce in my 60’s or 70’s doesn’t exactly sound promising.
Of course, his pension statements remind us that he can leave his benefits to a spouse, or qualifying dependent. But it would discount the monthly benefit amount. By how much? It doesn’t say. It also vaguely references additional penalties for age differences. Our twenty year age gap could come at a huge cost.
We don’t know what those costs are. Bryan is ever the optimist, convinced that it won’t be so dramatic. I’m ever the pessimist, planning for the worst. My fears were bolstered when I recently helped my mom with her pension forms. Granted, it’s a completely different industry, and her pension is much smaller. Her options were to claim her entire monthly benefit, and leave my dad nothing, or leave my dad 50% of her monthly benefit if she were to die first, and lose 1/3 of her benefit. In Bryan’s case, that would lower his benefit to around $3,300 per monthly, and leave me with $1,650 if he were to die first. Ouch! In addition, her pension stated there would be a 40% penalty for an age gap of twenty years. That would lower those amounts to $1,980 and $990.
Of course, all of that is just assumptions. His pension could handle things completely different. Or, by the time he decides to retire, we could be looking at drastically different numbers. But, even still, I feel the weight of those numbers. It makes me feel selfish for even making my needs a consideration in his pension plans. I think of all the stereotypes of women my age dating men his age. Gold diggers. Not that there’s any gold here to dig. But then, I worry about his health failing. He’s very active now, but he isn’t always careful. He smokes, drinks too much, and pretty much refuses to go to the doctor, or get any type of preventative testing done. It isn’t that I can’t take care of myself financially now. But I worry about having to step away from my career to care for him, and then struggling to make ends meet as I age, or trying to reenter the workforce as a senior. And, being childless, there’s no one I can fall back on (Not that I agree with depending on your children for your care anyways). Or him not being able to live out the retirement he wants, because I’m unable to step away from work.
The more I think about it, the more overwhelmed I start to feel. And selfish. It would be irresponsible of me NOT to plan for my own financial future. I can’t just throw caution to the wind and assume everything will work out. But the reality is, despite his current financial situation, Bryan is in a MUCH better overall position than I am. One way or another, being with me hurts his retirement plans. And I feel the weight of that. If he leaves his benefits to me, I feel selfish for drastically cutting into his monthly income. If I start throwing everything I have into my own retirement, I feel selfish for prioritizing that over all of our other goals.
All of this would be much easier if we were closer to the same age. But we’re not, and age isn’t something we can change. The best we can do is be open and honest with each other, about our fears, our dreams, and what we’re willing to compromise on. I think that we both agree that our relationship benefits each of us in ways that are more than financial. And in the end, it’s worth whatever sacrifices we’ll need to make.
- Cindy W.