If you’re married or have a partner: Want to boost your chances of having a secure retirement? Interested in reducing some of the tension at home? Keen on avoiding an irreparable split? Then you should take a look at how you make financial decisions about retirement together.
Study after study point to arguments about money as being one of the top reasons couples fall apart. And don’t be complacent just because you’ve been together for decades. Sadly, more and more people over 50 with long marriages are calling it quits these days.
Even if the situation doesn’t become that dire, it’s important to work together effectively to finance your retirement. By doing so, you’ll maximize opportunities, save money and prevent unnecessary unhappiness.
But how exactly do you accomplish this? I’m not a marriage counselor, but as a financial planner who has worked with hundreds of couples over 30 years, I’ve noticed a few distinct patterns for success:
Clarify, Prioritize & Dollarize Your Goals
Before considering constraints, discuss your retirement dreams and write them down. Answer questions like these:
Where would you both like to you live when you retire? How much would you like to travel? Would you prefer to own a home or rent (and how much will that cost)? Is helping the kids financially a priority and, if so, how much support do you have in mind? Is it important that you’re both debt-free when you retire and, if so, what will it cost to achieve that?
Don’t go to the next step until you agree on what you both want the broad picture to look like and how much it’ll cost. If you or your partner has goals that the other doesn’t, that’s OK. Write them down, too.
Chances are, you’ll have to compromise; I’ll deal with that shortly. But for now, the critical point is: clarify what you both want your retirement lives to look like, what your priorities are and your best estimate of what each item costs.
Mark each item as either a “must have,” “want” or “wish.” That will be invaluable when it comes time to putting your plan into action.