When my husband and I discuss retirement, he starts dreaming about finally getting that Corvette he’s always wanted. While he would be perfectly content to spend his retirement years under the hood of a car, I dream of traveling the world.
We aren’t the only ones who don’t have identical visions of retirement. In a 2018 Fidelity Investments survey, 54% of couples disagreed on the amount of money needed to retire, and 40% had differing answers on their planned retirement age.
In some ways, that’s not surprising. Couples often disagree on financial and lifestyle matters. But adjustments due to disagreements can become more difficult once the balance shifts from wealth accumulation toward spending a nest egg.
We urge couples to resolve any retirement planning differences long before a shift in lifestyle becomes reality. Let’s look at a few key areas where couples need to find common ground before they can dive into details about how much to save and how to invest.
When and where to retire
Partners often have different time frames in mind for their individual retirements. This could be due to age differences, expectations at their respective workplaces, or how long each wants to or is able to work. You don’t need to nail down specific retirement ages right now, and don’t need to retire together. But you do need to know what your general timeline looks like.
The where is also tied closely to the when. If you’re planning to downsize or move to a different location or split time between locations, that could affect your timeline.
If you are considering relocating, try to spend some extended time in your intended destination together. Discuss how you each feel about living there permanently. If it’s not the right place for you, knowing that now could save you from throwing off your timeline.
Your lifestyle in retirement
Some people see retirement as a time to do very little; others see it as the time to do everything they couldn’t do while working.
While these are individual choices and you don’t necessarily need identical lifestyles, your choices will affect your joint financial planning. Discuss how each of you envisions retirement. Arrive at an expense estimate for that vision while you still have time to reach an appropriate financial target.
Examining your current lifestyle is a good starting point for this discussion. Are there expenses that will go away? Are there new ones that will pop up? Do you plan to work part time or turn a hobby into a little business?
Unknowns in retirement
“Expect the unexpected” applies all the way along the journey toward retirement, but perhaps even more strongly in our later years.
What will your healthcare costs be? If one of you needs long-term care, should you purchase insurance to cover that? What happens if the market suffers a severe downturn right after you retire? What if one of you dies much sooner than expected?
While you obviously can’t plan precisely for an unknown, talking about how you would respond will make things easier. Consider what level of risk you can jointly tolerate, who will manage your money, and how you will fund any emergencies.
Your estate planning should be done in conjunction with retirement planning. The partner who isn’t the day-to-day money manager should be able to take over if needed.
Communicate and adjust
Communication is vital, especially when it comes to something as important as our financial independence and security in our later years.
Almost all of us will make some tradeoffs and adjustments (as we do throughout our relationships). The earlier you negotiate those tradeoffs, the more likely you are to achieve a retirement that satisfies you both.
Mallory is a Wealth Manager and Shareholder. She listens deeply and helps simplify complex financial situations to help clients move into an easier, clearer future. She aims to give financial advice that is compassionate, wise, and easy to understand.