This post is really aimed at people who are married, common law married and otherwise living with someone for an extended period of time. In fact there is a high probability that you both will retire together when the time comes. Most spouses have a certain expectation that while there will be changes when you retire, but the changes will not be significant financially. Sure you will have a lot more time on your hands and with each other, which is really the subject of a completely different post. This post is about discussing with your spouse, your plans for retirement, how much you each bring to the table in terms of financial support and what adjustments that are driven by financial ability, that both of you may need to make while you are retired. Your 401k and other savings if you have them will determine if your plans can be met.
What Should be Discussed?
In previous posts we have talked about saving, about diversification, the importance of investing in high quality investments, the importance of a good adviser and the importance of thinking long term and avoiding the get rich schemes. These are some of the things that you and your spouse should be discussing all along during your pre-retirement years. Many couples will have similar ideas and strategies about saving and investing for retirement however some people may have totally unrealistic plans for their retirement compared to their spouses.
While these subjects might be a challenge for many people and their spouses, it gets even more difficult. It is very important to discuss the type of lifestyle you want to lead during retirement and how you are going to finance this lifestyle. There is a possibility of being totally at odds with each other and not having the money to accomplish some of the things you both would like to do.
Communication
Some people have never been very good at communicating within the family unit so when it comes to money, there is an even more difficult hurdle to get over. Now you have to talk about your 401k, your investments and your plans for retirement. One couple we know has never really had this discussion because this was the man’s job to look after. Now he is suffering from Alzheimers and cannot have the discussion that is needed. His spouse is at a total loss. She has no idea if she will have enough money or whether she should continue working.
Some experts suggest that you both discuss your vision for retirement to see how they mesh and also the cost of the plans that you both are thinking of. This vision will evolve over time as you get closer to retirement, with things such as health, family, grand children and finances become more clear. Be prepared to constantly adjust your vision and plans as you get a better picture of your finances.
At the very minimum, both spouses should take the time to know what their investments are invested in, who they are invested with and what it will provide them at retirement in case circumstances outside their control force a change in plans.
The Cold Reality
While we all may have grand visions about what we would like to do, the cold reality is really how much money you have, how you manage it and how well you spend it. The other cold reality is your health. Will you live long enough and if you do, are you healthy enough to enjoy it? These factors will determine how much of your vision you can actually achieve.
You may be limited in funds, however there are ways also to make your dollars stretch for you. Visiting friends, taking advantage of seat sales, bargain trips are just some of the solutions to consider. You may be very well off financially and can afford many things that the majority of people cannot. There is always something more expensive than what you can afford and you will have to compromise in some manner to make it work.
What ever you decide to do and how you do it, your spouse is going to have to go along with your approach. They might have a totally different view or be extremely disappointed, but either way there is only so much money to go around.
Final Thoughts
Today there is another harsh reality. Many couples do not make it to retirement together. Some say as many as 50% of the population will get divorced. With these kinds of statistics, anyone reading this post should stop and think about their situation and how well prepared they are individually for retirement. We are not suggesting you should manage your finances separately, but we are suggesting that each party take an active interest in preparing and saving for retirement.
Talking with your spouse regarding any of these issues can be difficult and it may take a lot of time. Patience is called for and good listening skills are needed to really make sure that you fully understand your spouse’s vision for retirement, their savings and their overall plans and objectives.
We know that our readers will have comments on these posts. Some will agree, while others will not. All positive constructive comments are welcome and will help us all prepare for retirement.
Young Couples and Middle Age Couples
If you fall into this age bracket and expect to retire with your spouse, now is the best time to discuss your plans for retirement. Timing, travel, vacation home or whatever dream either of you have should be discussed.
Once you have developed some sort of plan, the time is now to invest in 401k’s for both parties, assuming that both spouses work, in order to achieve the goals that you have set for yourself. Some of our other posts discuss the basics of 401k’s and saving so we would like to refer you to these posts to help you plan for the future. Starting early is the best way to achieve your objectives.