Finances can put enormous pressure on a marriage. Perhaps that’s the reason so many couples don’t find the time to discuss money.
Many financial planners have shared stories with me about the issues that can result when couples don’t sit down regularly and discuss finances. Those issues can take an entirely new set of problems as the pair approaches retirement age.
Imagine if one spouse dreamed of retirement at the beach and the other envisions a post-career life in the mountains. It happens more often than you think, financial planners say. So, topping any list of retirement tips for couples will be communication.
- Sit down on a regular basis and talk about money and finance. And do a budget. Don’t wait until you are near retirement to talk about your individual retirement dreams. You want to realize in your 50s that one spouse wants to retire to Florida to play golf while the other planned to retire “in place” at the family home so they can stay close to the children and grandchildren. Also, sometimes there’s friction when one spouse retires while the other is still working. The retired spouse will inevitably want to travel or enjoy have a more active social life.
- Have a written financial plan. “You don’t have to have a fortune to benefit from a financial plan,” says Brownsburg, Ind.-based financial planner Brian Singer. “What you have to have is a vision. People don’t have that. People feel like they have to downsize on their dreams. As you near retirement your choices reflect your hopes further than your concerns and fears so much.
“The best retirement outcomes tend to be those where a person follows a process and a plan,” he says. “You have to be ready to embrace change. Have a vision. Think about where you want to be, who you want to be with. Be ready for change. You need to have a spending plan that lets you do what you want to.”
- Map out a retirement income plan and retirement tax plan for 20 30 years. One mistake people make in retirement is not recognizing the challenges a surviving spouse will have,” says Kirk Cassidy. “Not only is surviving spouse likely to live on less money because one Social Security check goes away. They also pay more taxes. You may have $15,000 ln reduced income and pay $6,000 more in taxes. You go from filing as married filing, to filing as single. There are less deductions.
“When one spouse deceases other, income brackets re cut in half,” Cassidy says. “People don’t prepare for that and anticipate that.
- Look at Social Security. “If you can afford to, try to defer taking Social Security from higher-earning spouse,” says Cassidy. “Every year you delay it is an 8% deferred credit.”
And, while it makes sense for people who can afford it to wait until 70, so they can maximize their benefits, it does not make sense for everyone. You should consider your medical history, your family’s history with longevity and your marital status.
- Work with a financial professional. “You should be confident that you have right kind of financial professional you are working with,” says Singer. “One sign that you do is you feel good and you have plan that’s been mathematically tested. You feel you can get through 20 or 30 years of retirement with income that matches your desired lifestyle. Let your financial team do the heavy lifting so you don’t have to be concerned with that stuff.” Your team of financial professionals may include insurance agents, tax advisors, legal professionals, as well as investment advisors or registered reps.
“Your relationship with money will change in retirement,” says Cassidy. “We need to shift our thinking. The relationship is changing from serving our money. We must find a way to get that money to serve us in retirement.”
This article is for informational purposes only and is not intended to provide any tax, legal, or financial advice. We encourage you to discuss specific your needs with qualified financial, tax, and legal professionals.