Have you ever had a disagreement with your spouse about money? Surely not! Never! Right? Alright, come clean; it is one of the top issues couples argue about after all.
Whether you bicker about spending or have larger discussions about investments, getting on the same page about finances is, of course, a good idea. Without a clear, shared vision, money can become the elephant in the room, silently causing tension that could lead to bigger issues down the road. Here are five essential questions to help guide a conversation with your other half.
1. How Will You Spend Your Money in Retirement?
You may have one vision for retirement, while your spouse has another. It’s important to discuss these differences early. What do you plan to spend on together as a couple? What personal endeavors do you each want to pursue? Create a detailed budget that factors in income, savings, and potential healthcare costs. Unpleasant as it is to consider, one of you may outlive the other and/or face higher medical expenses.
2. How Much Risk Are You Willing To Take On?
Asset allocation and diversification remain pillars of retirement planning. A properly diversified portfolio – one that mirrors your appetite for risk – could help protect you in times of market downturn. Are you on the same page with your spouse about how much risk to be taking? This is a very common trouble spot with couples we meet. Between the two of them, they have a different idea of how they should be invested. Most clients we see are in one of two camps: Taking on far more risk than they realize, or taking on far more risk than they need to at this stage of the game. Ask yourselves: Is the potential upside in the market worth the risk at this stage of your lives?
3. What’s Your Social Security Strategy?
Social Security is a critical piece of your retirement income plan, but many couples overlook how their claiming strategy impacts their long-term finances. Don’t just take benefits at face value. Consider survivor and spousal benefits, taxes, and Medicare premiums. A personalized Social Security analysis can help you avoid costly mistakes and ensure you’re maximizing your benefits. Every couple’s situation is different. Most Americans take their social security benefits at face value. And they wind up leaving tens of thousands, if not hundreds of thousands of dollars on the table.
4. How Will You Plan for Longevity?
Today, people are living well into their 80’s and 90’s. And it’s not uncommon to know of someone who is over 100 years old. In fact, many seniors aren’t just surviving in their older years – they’re thriving. And the statistics keep improving every year. The longer you live means the longer you have to make your money last in retirement. Additionally, women live longer than men. In fact, 85% of centenarians … are women! And because of this, 90% of women will be solely responsible for their own finances at the end of their lives. Make sure your retirement plan accounts for this longevity and that your money lasts as long as you do.
5. How Will You Cover Health Care and Long-Term Care Costs?
Health care and long-term care costs are often overlooked but can be the biggest financial strain in retirement. Plan now so a health issue doesn’t turn into a financial disaster later. By making retirement decisions with a joint outcome in mind, money can last longer and both spouses can look forward to a more secure retirement.
By answering these five questions together, you can ensure a more secure and harmonious retirement. Couples who plan with a joint approach are better equipped to manage their finances, minimize risks, and make the most of their golden years. Retirement should be a time to enjoy life – not stress about money. Taking the time to get on the same page now will allow you both to retire confidently, with peace of mind for the years ahead. And if you need a mediator to weigh in on the right move for you, give us a call: 952-460-3290.
