Originally from ticket #11767.
PROBLEM:
Hello,
Kirk C. called in today needing assistance with the Couples Retirement planner asap because his clients are coming in in about 30 minutes. He says the wife is 58 and is not currently working and the husband is 65, but if he changes the wife's retirement age to 65 it takes away 10 years from their retirement, even though she is not working. Please assist. He can be reached at [snipped]
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SOLUTION AND EXPLANATION
Just to recap our phone conversation.
This is an odd situation that comes up at times when people think they can just flip retirement age from this to that and assume its a valid comparison. However, in this case husband makes $200k but the retirement goal is at $100k.
So when the wife is set to retire 7 years before husband at age 58... program begins the retirement analysis... it adds 200k of income because that is an income source during their retirement... but if you leave the expense goal at 100k then the job income alone is enough to fund retirement... a bunch of "extra" income is occurring and whenever "extra" income comes into the picture it just gets saved into Taxable in most cases... So the program adds about 100k into their investments for 7 years (i'm just talking in general not exact numbers just to make this explanation simpler)... that's "extra" that the program thinks you don't need because it only sees the $100k goal.
One solution is to enter a special expense for 100k during the 7 year period because "while husband is still working they are spending all his salary except for their 401k savings".
Another option is to move wife's retirement age back to 65 because you really just don't want to analyze the 7 year period. In the opposite case where remaining working spouse makes very little, say $20k... we definitely want to analyze the 7 year period because they may have to dip into investments to get through the 7 year period. For the high end wage earner, though, this is not the case and the job income has the opposite effect of creating "overage" in the plan.