5 Retirement Planning Steps Every Couple Should Take
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By Laura Shin,
The Fiscal Times
October 31, 2013

Terry Finn, a corporate lawyer, and his wife, Kris, a non-profit executive, retired two and four years ago, respectively. The couple, both 65, mostly agrees about what they want out of retirement and have learned to compromise. Yet they haven’t figured everything out, including where they’ll relocate.

“That’s probably the one bone of contention. I’d like to be in a warm year-round climate to get outdoors more. My wife is into a lot of things here in Boston and doesn’t want give those up, so it’s an ongoing discussion,” says Terry, adding that where their three children settle could also tip the scales.

For all their uncertainty on that issue, the Finns are ahead of the game in most other respects: They began working together decades ago on a financial plan for their golden years. That puts them in the minority: Only 38 percent of couples do their retirement planning together, according to a survey by retirement research firm Hearts & Wallets.

“Most couples don’t realize how important it is to work together on it because they look at their accounts individually,” says Emily Boothroyd, a financial planning specialist at Westport Resources, an investment firm in Westport, Conn. “It’s not something they work on together as they would with a joint checking account. But if you’d like to retire together, then the retirement accounts you’re shaping earlier on in life will eventually [fund] the joint bank accounts when you retire.”

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Couples should work on their plan as early as possible to increase the chances they’ll accomplish them. Here are five steps couples should take to plan for retirement.

1. Schedule a time. Whoever decides to initiate the conversation shouldn’t just spring it on his or her partner. “One partner needs to step up to the plate and say, ‘We have something to talk about.’ Making it a request is less threatening: ‘Can we agree on a time to do that?’” says Roberta Taylor, a psychotherapist and co-author of The Couple’s Retirement Puzzle: 10 Must-Have Conversations for Transitioning to the Second Half of Life.

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2. Prepare separately. Before the meeting, take some time separately to really think about how you envision your retirement. Be ready to discuss whether you want to move, how you expect to spend your days, and how much money you think you’ll spend annually.

There’s no room for shyness here. “Going into a meeting or a conversation thinking, ‘She’ll never go for this’ will stifle your ability to come together as a team,” says Boothroyd.

Once you have a long list, look for common themes. “Maybe you have a lot of things related to travel, or you’d like to live in a different place or have a ski house or a beach house. Finding common themes among a larger group of items can help point you in the right direction,” says Boothroyd.

Finally, identify why each item is important to you and where you might be able to compromise.

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3. Set ground rules. “No blaming or shaming, because as soon as [people] hear what is possibly an attack they get defensive,” says Taylor. “Instead, be compassionate about each other’s feelings. Agree to listen. Too often, couples get into a conversation and instead of listening to what the other is saying, they’re thinking about their response.” 

Boothroyd concurs: “Never laugh at anyone’s dream. Remember to give your partner as much respect and air time as possible during this dialogue.”

4. Cover these topics:

  • When and where you will retire. Although most people expect to retire in their mid-sixties, many end up retiring earlier — or may be forced out of work sooner than expected. Consider worst-case scenarios. Talk about if you’re going to downsize or move to another city or state, the tax implications, the climate, and the culture.
  • Family money. “A lot of people at this stage of life have elderly parents who are living longer,” says Taylor. “Do they have the resources to pay for own care?” If not, will you have to help? Also, if you plan on leaving an inheritance for your children, deduct that from your retirement savings so you have a clear picture of your available financial resources.
  •  Your own end-of-life care. If you don’t already have a living will that outlines the medical care you desire if you can no longer give consent, get one now. Even if you do have one, talk about what kinds of long-term care you would want if, say, dementia becomes an issue, as such care can be costly. While health care expenses make up about 10 percent of the budget of those ages 50-64, they comprise almost 20 percent for those 85 and older, according to the Employee Benefit Research Institute.
  • Charitable giving. Many retirees want to give back, but you should discuss whether that will take the form of time or money.

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5. Run the numbers. Many people use a financial professional to determine the cost of various goals and what their total target amount will be, factoring in inflation and projected investment growth. You’ll want to understand what money you have now and how you would have to invest it to achieve that number, and what you’d be willing to forgo if you can’t.

Keep in mind this conversation will look different depending on how far off retirement is. In your 20s, the conversation will be more about getting your money habits in line while saving as much as possible in order to maximize the benefits of compounding, whereas in your 50s, the numbers will more concretely shape your retirement.

Ultimately, says Boothroyd, “Do what works for you, because there isn’t one right way.”