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Whether it's about the younger woman marrying the older man or the younger man marrying the older woman, the financial planning issues in May-December relationships require much more detailed work.
It's not a simple issue of playing the odds on longevity. If the couple has kids, the death of a spouse can be cataclysmic and, despite the probabilities, the older parent doesn't always die first. Even without kids, the effect of poor financial planning can be devastating to the surviving spouse.
Marriage between contemporaries is tough, but a 20- to 30-year age difference can make it a whole new ballgame. For couples far apart in age considering a trip to the altar, here are some issues to consider:
•A prenuptial: Yes, a prenuptial agreement will protect you to varying degrees in case of divorce. But it has an important secondary benefit - it will force both of you to think about all the financial issues not only if you split but if one of you becomes incapacitated or dies. Good financial advisers in the prenup process should take you through all possible worst-case scenarios you might face during your married life.
You'll have to disclose your assets, liabilities and money goals and how you'll provide for kids you want as well as kids from previous marriages. You'll also be forced to think about what could happen if one of you becomes sick or permanently disabled and how you'll feel if you're still working 10 years after your spouse retires. Even if you agree not to do a formal prenup, treat the process as a necessary first step in planning well for the future.
•Life insurance, life insurance and life insurance: Older spouses will pay more for it, but life insurance is critical for both spouses. It's not just about the older spouse dying first. If the younger spouse dies, what happens to the kids if the older spouse passes away before they're on their own? A financial planner can help couples work through these scenarios and find the right insurance options.
Consider long-term-care insurance: You both may stay healthy as horses well into your 90s but end-of-life care is always expensive. Most nursing home stays last two years and cost well over $100,000 per person. Can you cover that cost out of pocket?
•Women need to become more aggressive investors: According to the U.S. Census Bureau, the average age of widowhood is 55. Though the longevity gap between men and women will probably narrow in the future, women still need to plan for a longer retirement than men. Add the cost of raising kids as a single parent and other household expenses and retirement can become a distant dream for surviving spouses. Make sure both of your retirement strategies are reviewed for all possibilities before you say "I do."
•Inventory survivor's benefits now: It's not a terribly romantic subject, but it makes sense to see what you might get from public and private sources if your spouse dies. For instance, you are eligible to receive survivor benefits from the Social Security Administration if your spouse dies and your children are minors. If you are both working, it's definitely worth a trip to your company's human resources department to talk through survivor's benefits offered by your respective employers.
•Get your wills, health directives and beneficiary information in order: Young couples often wait a few years until talking about wills, right-to-die and other issues tied to mortality. Couples with big age differences can't afford to wait. Plan it now and when your marriage is official, make sure you execute new wills, health care powers of attorney, medical directives and up-to-date beneficiary information on all your joint and separate assets.
It may be hard to think about these issues at the beginning of a relationship, but taking care of this early on - before a tragedy or costly planning mistake occurs - may be one of the greatest gifts you can give to each other.
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