As a couple, are your and your spouse’s expectations for retirement aligned? How confident are you in your future financial health? Fidelity’s 2021 Couples and Money Study highlights that communication is critical to financial success. Money discussions might cause some uneasiness or even feel taboo, but they are a crucial element to your future financial success. This article summarizes emerging trends from the Fidelity study, three planning tips for couples and why teamwork and support networks are essential for singles in or near retirement.
More couples are in sync: It’s encouraging that many couples feel they’re in sync with each other. Three out of four couples say they communicate with their other half very well, and one in four claims to do so exceptionally. However, only half say they make financial decisions jointly. This includes both day-to-day and longer-term decisions.
Is money a taboo subject? Money discussions can be difficult. For example:
- Eight out of 10 couples expect to live a comfortable retirement life.
- 48% of couples disagree on the age they plan to retire at, and 51% do not agree on how much savings they need to retire.
- 34% of couples disagree on whether they are savers or spenders.
- 41% of couples argue about money occasionally, and 18% identify money as their greatest relationship challenge.
- One in five women report little to no involvement in retirement planning.
- Four out of 10 same-sex couples report that only one of them is the primary decision-maker.
- One out of four people say they are often frustrated by their partner’s money habits but let it go for the sake of keeping the peace.
Top retirement objectives:
- 76% say their main retirement objective is to spend time with family and friends.
- 73% wish to take it easy and relax more at home.
- 65% want to travel. This is usually the number one objective of those retiring. However, due to the pandemic it fell to third place this year.
Three planning tips for couples
Alignment of goals and priorities: If you can’t decide when you plan to retire or what you want your retirement lifestyle to look like, why would it matter what investment strategy you choose? Sound planning starts with shared visions such as where to live in retirement and what you will do (relax, focus on a second career, travel, etc.). These help define how much you’ll need to maintain your lifestyle and the requisite financial, estate and investment plans.
Plus, here is sage advice from Steve Welsh about priorities and relationships: “When posed with a question, ask each other how important it is to them. If on a scale of one to 10 (10 being very important), it’s an eight to her and a three to me, then it’s her decision. On the other hand, if the priorities rank high— we both rank it an eight— then we need to take the time to discuss and negotiate.”
Retiring at different times: This might occur due to age differences, or someone may not be ready to retire. It can be advantageous to save more and accrue more considerable benefits such as Social Security. This can serve as a trial run for retirement.
Honest and open conversations: Retirement can be one of the most challenging transitions people make. It’s also an exciting time that offers more freedom to explore and discover. It spans decades and is challenged by making money last (shifting from savers to spenders), uncertainties about life expectancy and navigating the aging process. Conversations with family, friends and trusted advisors are needed to develop and adapt your financial and life plans.
How to plan as a single if you’ve been planning as a couple
You and your spouse may have a plan in place for retirement, but what if circumstances change and you find yourself planning your financial future alone? If this is the case, specific strategies may be needed for retirement savings, investments, health care and estate planning. Single and childless seniors miss a backup that many take for granted: having a spouse or adult child who can step in when needed. The population of those who age solo is diverse: it is comprised of people who choose not to marry, those who have children and people dealing with different life events. Others may age alone because of the death of a spouse, divorce, or they may have children who are estranged or unable to help.
It’s essential to build a team. That reality becomes clearer should you find yourself caring for your parents. This causes many to contemplate, “Who will take care of me when I’m old?” as author Joy Loverde titled her book on eldercare.
Your team may include extended family, trusted friends and professionals who help you think things through and make decisions should you become incapacitated. Consider the value of professional support. Financial advisors are helpful for their expertise and objectivity. They also understand financial alignment and can facilitate difficult conversations.
May this sage advice help you secure your future wisely.