SPOUSE RETIRING BEFORE YOU? BETTER PLAN AHEAD

This "Financial Focus" column is prepared by Edward Jones Investments, headquartered in St. Louis. Jones includes branches throughout the nation, including Cape Girardeau and Jackson.

You and your spouse probably share many of the same dreams for retirement. You may want to start a small business together, travel around the world or just relax with your family at your vacation home. To achieve your retirement goals, you will need to do some comprehensive planning. One of the things you might need to plan for is the possibility of one spouse retiring before the other.

If it seems likely that one of you will retire several years before the other, consider taking the following steps:

Make needed changes to your portfolios. Of course, you and your spouse will own some investments in common, but you might also want to maintain separate portfolios, with each one containing different types of investments. This will result in greater overall diversification -- always an advantage to investors.

If you're going to retire at different ages, then you might need to adjust your individual investment portfolios accordingly. For example, if you are the older spouse, or at least the one who is going to retire sooner, you might want to shift some of your assets from growth stocks to fixed-income securities. However, given the fact that you might spend 20 to 30 years in retirement, you will want to maintain some elements of growth in your portfolio; otherwise, you risk losing purchasing power to inflation.

On the other hand, the younger spouse will have more working years left, and can better afford to take a bit more risk in exchange for potentially higher returns.

Decide when you'll take your retirement plan distributions. If you have a 401(k) or other retirement plan where you work, you will probably have several options for collecting the money when you retire. If your spouse is still working, you might not need to tap your retirement funds right away. Instead, you could keep your money in your employer's plan, if allowed. Or, if you're eligible, you could roll the funds over to an IRA. If your spouse has already retired, you may have a greater income need, so you might want to start taking your distribution as soon as you retire. Before you accept any distributions, however, consider how they will affect your taxes.

Update your health care and disability coverage. If your spouse retires before you, and he carried the health care coverage through work, you'll need to assume this responsibility. If you're the spouse who's still working, you should consider purchasing disability insurance to protect your income.

Plan ahead -- and take action

By taking the appropriate steps, you can ensure a smooth transition period between the times that you and your spouse retire. So, get started soon. One day, you'll be glad you planned ahead.

The Southeast Missourian does not recommend that readers buy or sell stocks featured in this column, which is provided for informational purposes only.