A harmonious retirement with your spouse may require planning, communication, and compromise.
You want to move to Florida; she wants to stay near the grandkids. She wants to keep working for another 10 years, but you have visions of traveling the world. Just because you've been married for decades doesn't mean you share the same vision for retirement. Here’s a snapshot of some of the issues married couples could face when it comes to planning retirement and tips for successfully navigating the challenges.
A common conflict among married couples planning for retirement is location. "Many of my clients want to stay in a certain area but often disagree on the type of home. One spouse wants to downsize; the other couldn’t imagine leaving the home in which they raised their children. This can lead to big differences in lifestyle in many cases,” says Bob Gavlak, wealth advisor at Strategic Wealth Partners. “Downsizing can inject capital into a plan and help to increase spending or just help conserve cash."
When it comes to legacy, spouses often haven’t had the discussion; they often assume their partner agrees with them, Gavlak says. "Often I ask and one spouse will say: 'I didn’t get anything from my parents; my kids will be just fine.' And then the other looks bewildered and says, 'I was hoping to leave enough to pay for college or a house.' The idea of what happens to a family’s assets after both spouses pass away is a topic that is avoided. This can impact the vision for retirement, because if you want to leave a few hundred thousand for the next generation, that drastically reduces what you can spend during your lifetime," Gavlak says.
Another common issue that arises between spouses who don’t proactively share their retirement vision is anticipated spending levels in retirement, says David Brinkman, investment relationship manager at Schneider Downs Wealth Management Advisors.
For example, "One spouse has expectations of finally exploring the world and visiting all the sights they have talked about seeing for years, regularly going to nice dinners and social events, and in general enjoying the wealth they have been able to accumulate. But the other spouse has visions of staying close to family, helping to raise grandchildren, and living a more simplified lifestyle in retirement," Brinkman says.
Not being on the same page is a huge problem for many retirees, says David Hays, president of Comprehensive Financial Consultants. "The spouses can have very different opinions on where to live, how to spend money, how much they want to travel, how much they want to see the grandkids, how close they want to live to the grandkids, and these conflicts can blow up if the retirees don’t reach some common ground," Hays says.
A couple’s retirement portfolio looks and feels different when it becomes the primary source of income, Brinkman says. "During their working years, couples who may have been comfortable with a more aggressive investment portfolio and its associated risk/reward dynamic may no longer be so comfortable," Brinkman explains. The risk/reward dynamic should be periodically revisited for couples heading into retirement.
Make a list and share it. Sit down separately and write down some of your ideal goals for retirement, Gavlak says. "Be as fun and creative as you want—come up with all of your goals and desires. Then get together and compare those lists. You may be surprised at how many things you have in common—or different dreams that you may not have even thought about," Gavlak notes.
Recognize retirement as a new phase. The adjustment can be more difficult than people anticipate, Hays says. "Once you’re retired, you need to fill your life with purpose, not find ways to simply fill up your time. The dynamic around the house can change. In many cases, the wife handled all the domestic responsibilities. Now, the husband needs to pitch in and play a bigger role at home. It’s important for couples to find resources that can trigger their thoughts and passions in retirement. They can find that in different ways, such as continuing education, fitness and health, faith, and through volunteer work," Hays says.
Communicate and compromise. The best way to navigate any of the potential conflicts is to talk about your goals and visions for retirement. "I can’t tell you how many times a spouse has said they would like to travel to Europe and the other one looks at him/her and basically says, 'I never knew that!' As long as both individuals have an understanding of what their goals are—you can work through both sides, build a plan, and make compromises where necessary. A big part of a marriage is communication and compromise, and this doesn’t stop when work stops," Gavlak says.
Define goals and model cash flow. Cash-flow-based modeling is an important tool for couples preparing for retirement. "It begins with their current financial net worth, along with current and anticipated future income streams, and projects their financial plan forward under various assumptions including assumed retirement spending, investment returns, impact of taxes, and other retirement factors," Brinkman says.
Consider using an advisor—an objective third party. Successful couples recognize the importance their advisor plays in their overall financial plan, Brinkman says. "Not by coincidence, the couples that develop and regularly evaluate their plan with their advisor years before retirement are more successful and happier retired couples. During periodic financial projection reviews, the advisor is in the ideal position as a third party to identify and facilitate constructive dialogue with the couple regarding their long-term financial plans’ strengths, weaknesses, and areas that they as a couple need to discuss further," Brinkman says.
Retirement planning isn’t a set-it-and-forget-it proposition. Your plans take thoughtful care and the help of professionals.
for thinkMoney ®
Financial Communications Society 2016
for Ticker Tape
Content Marketing Awards 2016
TD Ameritrade and all third parties mentioned are separate and unaffiliated companies, and are not responsible for each other’s policies or services.
Market volatility, volume, and system availability may delay account access and trade executions.
Past performance of a security or strategy does not guarantee future results or success.
Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.
Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.
The information is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.
This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.
TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2018 TD Ameritrade.