If you’re like most couples, you’ve dreamed big together about how you’ll enjoy your retirement, but you haven’t really addressed the specifics of how you’ll turn those dreams into reality. A NerdWallet survey found that while 76 percent of couples saving for retirement say they’ve discussed general decisions such as what age they want to retire and where they want to live, 30 percent say they don’t talk about how much money they will need to retire.
Communication about financial matters is important throughout your married life, including when you’re ready to retire. As you approach retirement, your money dialogue will evolve. Now, instead of just saving toward retirement, you’re beginning to develop a strategy for how to manage ongoing withdrawals from your portfolio, understanding how you’ll spend your nest egg, and knowing what you need to do to ensure it keeps growing so that it lasts for your lifetime. Discussions will grow to include health-related planning, and preparation for the possibility of one partner outliving the other.
Navigating Retirement Together: Tips to Help Retired Couples
As a CERTIFIED FINANCIAL PLANNERTM, I’ve worked with numerous couples who were entering or navigating retirement. Here are the 10 most important lessons I’ve learned from couples who’ve retired successfully—meaning they have enough money to fund the lifestyle they choose, and a plan in place to sustain themselves financially for the rest of their lives.
1. Understand evolving priorities and goals
The things that are most important to you can change as you pass through different stages of life. As a young married couple, you might have focused on saving to buy a home. In your middle years, funding college educations and your retirement accounts was a priority.
Couples who retire successfully reassess their priorities and establish goals that focus on what they need to do in order to have the life they desire during retirement. Need a starting point? Earlier in this series on money and relationships, I recommended a tool we use often at Mosaic, and it’s applicable here as well: download this two-page “life transitions” survey. Each partner can fill it out separately, then come together to go over results.
2. Create equitability
When you retire, it’s more important than ever for both parties to know exactly how much money you have saved, sources of income and how money is being spent. Equitability doesn’t have to mean sharing all financial responsibilities equally, but it does require you to both be equally informed about your true financial picture.
3. Continue to use a spending plan
Most financially successful couples have used a spending plan to manage spending and savings throughout their married lives. Retirement is no time to give up on budget-conscious thinking. You still need to have that monthly plan in place for how you’ll spend your money, especially when you’re no longer earning wages.
4. Remain vigilant about credit use and debt
More than 65 percent of households headed by people 55 and older carry debt, according to the Employee Benefit Research Institute. The average debt among seniors who carry debt is nearly $41,000, according to the Federal Reserve Board. If you still have debt, paying it off should be a priority in your overall financial plan. It’s also critical to manage credit use wisely; the last thing you want to do is create new debt during retirement.
5. Have a plan to keep your nest egg growing
Your retirement savings doesn’t just exist to fund your lifestyle right now; it needs to keep growing to ensure you’ll have money for the future. It’s advisable to plan for a longer life expectancy, which could amount to three or four decades in retirement, which means that ensuring your portfolio continues to meet your long-term growth needs will be important.
6. Make provisions for health care costs
Your health will change as you grow older, and even if you’ve always done a good job of taking care of yourselves, health-related crises can arise. Knowing your options for Medicare supplemental policies based on preferred healthcare use can make a big financial difference. Review and update elections during the annual open enrollment periods, if necessary, based on changes.
It’s important to have a plan in place for how you will pay for any health care costs not covered by Medicare. If you decide on home-based care, know your resources. In addition: consider whether you’d want to self-insure or obtain long-term care in the event of a prolonged health need.
7. Plan for the loss of a spouse
No one likes to think about it, but the reality is that eventually one of you will outlive the other. When the inevitable happens, will the surviving partner be prepared to cope with any loss of income that may result, such as a pension that ends with the death of the account owner? Discuss this important topic and plan ahead.
8. Consider staggering your retirement
No rule says you both have to retire at the same time! In fact, there are economic benefits to staggering your retirement. If one of you works longer, it’s that much longer that you have a steady income and the ability to continue saving for retirement. By delaying withdrawals from your retirement savings, you can make your savings last longer.
9. Delay taking Social Security payments
It’s a simple reality of the Social Security administration: The longer you wait to begin, the more you will receive when you do start taking it. If you start drawing social security payments as soon as you’re able—say, at age 62—your monthly benefit will be significantly less than if you can wait until age 65 or even 70.
10. Have a current estate plan in place
If you have an estate plan and the accompanying health care documents, you are able to tell others how you want your financial matters taken care of, should you or your partner become incapacitated permanently or temporarily. This is a great opportunity to review your goals for your estate, your legacy, and your family. You can also consider how you’d like to pass along your life’s lessons and values in an ethical will.
Get professional help.
Financial planning and tax planning processes change significantly when you retire. Navigating all the complexities can be difficult, and mistakes can be costly.
Retired couples: use money wisely. Consulting with professionals, like a financial advisor specializing in retirement management, and a tax advisor with expertise in how retirement funds are taxed, can help protect your nest egg.
What’s next on the horizon for your relationship as it matures?
This article the final installment in a series by our COO, Sabrina Lowell, on financial health for every stage of your relationship.
While you’re at it
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