Marriage And Retirement

Why A Lack Of Communication Is Detrimental To Marriage And Retirement Planning

by KNS Financial on July 11, 2011

When we think about saving up for our golden years, we often consider 401k contribution limits, Roth IRA tax benefits, and withdrawal rates. However, one major component of planning for one’s future is usually missing; most people fail to consider both marriage and retirement when thinking ahead.

Marriage And Retirement Planning: The Need For Communication

Just like in other areas of household finances, little communication exists between a husband and wife when it comes to retirement planning. Considering the fact that many Americans have neglected proper planning and analysis when it comes to the future (or even the present, if you judge that based on our greed), it should come as no surprise that many people have not discussed the details of retirement with their spouse. Take a look at these alarming numbers from a recent Market Watch article:

Almost two-thirds of couples don’t agree on the age at which they’ll retire, and one-third of couples disagree or don’t know where they’ll live once they retire, according to a survey of 648 married couples (a total of 1,296 people), conducted for Fidelity Investments by Richard Day Research Inc.

Those numbers are pretty scary. It’s hard to imagine a couple never discussing something as basic and foundational such as when and where they would like to retire. The fact that they don’t agree on these issues is cause for great concern. For instance, how can they know how much money they will ultimately need, if they do not know how much longer they will be working or how much it will cost for them to live?

Retirement And Marriage

Unfortunately, the disagreement and confusion doesn’t stop there:

Forty-seven percent of couples don’t agree on whether they’ll work in retirement, according to the survey of people aged 46 to 75 with household income of at least $75,000 or investable assets of $100,000 or more. Of the couples surveyed, 196 already were retired. The survey respondents were not told that Fidelity sponsored the survey.

I would have to say that this is the most surprising result of this survey. Almost half of those married couples who are less than 20 years away from retirement and have a decent amount of wealth, can’t agree on whether or not they will work in their retirement. This isn’t just a financial issue, but it also affects many other aspects of their lives!

The idea of working during retirement can greatly change the way in which you currently save. If you plan to sit around and do nothing in your golden years, then you will probably use every available penny to invest in your future. On the other hand, if you plan to work during that time, then you may not even be compelled to invest up to the IRA contribution limits early on (although, that may still prove to be a huge mistake).

Of course, given all of this confusion when it comes to retirement and marriage, there is no way that we can expect couples to have solid plans for the future. In fact, the results were worse in this category than the others:

Seventy-three percent of the couples surveyed disagreed on whether they have completed a retirement-income plan, and more than half of the couples surveyed disagreed on what their top source of retirement income would be.

This should serve as a wake up call to all couples out there! Apparently, marriage and retirement talks don’t go hand in hand. People are planning on spending the rest of their lives together, but for some reason, they fail to discuss major financial topics that will impact their future.

Marriage, Retirement & Women

Even though more and more women are working and are involved in the family finances, there are still a large number of wives who don’t feel as knowledgeable about their financial situation as their husbands. Consider these numbers:

Only 35% of the wives said they could take on full responsibility for the couple’s retirement finances if needed, versus 72% of the husbands.

While 20% of the husbands described themselves as “investors,” just 5% of the wives did. Instead, they tended to say they were savers or spenders.

I’m sure that out of the 65% of women who do not feel as though they can take over the retirement finances, many of them aren’t married to men who are purposefully keeping this information from them. Even still, this level of comfort and confidence can only be gained through repetition and constant communication. Last year, when I gave my thoughts about marriage on our anniversary, I identified things that I wanted to bring to our marriage and I’m sure that I wasn’t able to do everything. But, I have a responsibility to keep pushing until I get it right!

It will not be easy to break out of the mindset of focusing only on the short-term, and simply assuming that things will “work themselves out” in the long run. However, here are a few things which you can do to solidify both your marriage and retirement.

What You Can Do

Plan A Huge “Retirement” Talk – Take a look at all of these items and anything else that is important to you, then list your goals regarding each topic. Talk these things out until you are on the same page. Of course, this may take more than one session, but since you can’t make any moves until you have concrete goals, you have to keep at it!

Meet With A Financial Advisor – If you need help in developing a plan that will allow you to meet your goal, then enlist the help of an adviser. Be open and honest in establishing your goals, and the motivation for those goals when you meet. Be sure to meet with him together!

Schedule Regular Financial Meetings – Once you have your goals in place, set up regular meetings to check on your progress. My suggestion would be to hold quarterly meetings and make sure that all of your questions are answered.

Review Statements & Documents Together – Whenever you receive a new statement or other important document regarding a retirement account, take time to go over it with your spouse. You can incorporate this into your regular meetings.

As you can see, the answer to this problem is to communicate and work together. There is no magic formula – it will take hard work, diligence, and patience; but then again, so does marriage!

photo by Ambro

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