The Retirement Talk For Couples
According to a recent survey, couples said they discussed retirement planning an average of 14 times a year. The same survey showed 72 percent of workers are contributing an average of 6.4 percent of their annual income to a retirement account. Workers believed, however, that they should be saving 12.1 percent in order to have a comfortable retirement.
If you are in your 40s or 50s, you should be saving more than 10 percent of your income for retirement. Studies show the ideal amount is in the mid-teens to 20 percent.
Unfortunately, because of financial demands and cost of living, saving that amount for retirement can be difficult.
One way to help is having frequent and in-depth retirement-planning conversations with your significant other. Clearly communicating expectations, your financial requirements and retirement assets is crucial.
Here are some tips to help you get started.
* Talking about money and finances can be boring or something that can cause either or both of you to have your eyes glaze over when the topic comes up. Try to make it fun by having the discussions over a nice dinner or on a weekend retreat, where you can spend ample time with each other.
* Discuss the type of lifestyle you want to live. Do you want to travel more? Do you want to get involved in more activities? Will your desired lifestyle cost more than your current lifestyle? Where do you want to live?
Many couples assume they can have a higher standard of living in retirement. It is important to clearly communicate what your expectations are for retirement.
* Go over your retirement income sources. Do you have a pension, Social Security or investment property? Based on the lifestyle you want to live, can you afford it? Start a budget so you are able to see what expenses you have, and if you think you will need more or less in retirement. You may want to have a part-time job to cover some of the expenses. This exercise will help you determine if you need to lower your standard of living or raise your standard of income.
* Talk about your legacy. What do you want to leave behind for your children or other beneficiaries? Do you want to leave some for charity or a cause you believe in? Set up a will or estate plan so it is clear what will go where.
* Be a team. It is common for one spouse to take care of all of the finances. It is important that both are informed and have an understanding of what is going on, in case something should happen to the other. If you work together as a team, it is much easier to overcome financial difficulties.
* Work with a financial professional. An adviser can help take the emotions out of spending, saving and making big financial decisions. It can be easy to blame each other or make emotional decisions that are not right.