When you remarry later in life, financial planning remains as essential for setting financial priorities now as when you were younger. Regardless of your age, you need to calculate your joint net worth and plan the finances that will affect the new life that you will be sharing with someone else.
Commonsense steps to take when planning for your financial future with your new spouse include:
Listing the assets and outstanding debts each of you are bringing to the marriage. You must then decide whether you want to pay bills jointly from a joint account or maintain separate bank accounts, allowing each of you to continue paying your own debts.
When calculating combined assets, include any vehicles either of you owns, the amount of equity in your homes or other real estate holdings, balances in checking and savings accounts, retirement benefits, and earnings from jobs and investment accounts.
When adding up combined debts, be sure to include any unpaid medical bills.
Finding out the facts about your Social Security retirement benefits. If your former spouse died, or you were married at least 10 years before divorcing, you can draw benefits based on that person's earnings rather than your own if that benefit amount will give you more income. But if you remarry before you turn age 60, you no longer will have that option when you reach retirement age.
If you are widowed and drawing survivor's benefits based on your deceased spouse's work record, you will lose the benefits if you remarry before age 60.
Determining how you will handle health insurance coverage until each of you qualifies for Medicare. Planning for the cost of health care expenses is a key consideration in household finances; therefore, if you aren't yet old enough to qualify for Medicare, you may be able to get coverage under your spouse's employer-based or union-sponsored group health plan. If you still are working, you may have to remain with your employer's health plan—even if it costs you more—as your spouse's employer may not offer health benefits to spouses who can get coverage through their own employers.
You can apply for Medicare three months before you turn age 65, at which time you become eligible for Medicare even if you won't yet be receiving Social Security retirement benefits. But no matter what options for health care are available to you, it's important to know what your out-of-pocket expenses will be for insurance premiums, co-pays, deductibles, and any uncovered medical costs.
Making a new will as there may be changes in how you want to distribute your estate assets to your heirs, including your adult children, grandchildren, new spouse, and other family members. In deciding to whom you want to bequeath any retirement accounts you own, keep in mind that a spouse is entitled to inherit retirement benefits, including 401(k) and pension plans.
Since the money that accumulates in 401(k) plans over time is considered marital property, if you were previously married and divorced, your former spouse may be entitled to a portion of the benefits from those accounts even while you are still living and drawing on the accounts. Unless that person signs away his or her rights, the court usually divides pension plans as part of the divorce settlement. Likewise, you may be entitled to a portion of your ex-spouse's 401(k) benefits even after you remarry.
Changing the names on legal documents. When you remarry, you may decide to change your benefit options or the beneficiaries you named on your life insurance policies, investment accounts, and retirement savings accounts, particularly if you update your will or want to add the name of your new spouse. You also may want to change your medical and financial powers of attorney.
For more information on financial planning, check with companies like Bauserman Financial Services Inc.