Retirement Income Planning for Couples

Over the years, you and your spouse have probably had many wonderful conversations about your retirement dreams. Maybe you talked about traveling to exotic destinations. Maybe you have always wanted to move closer to the grandkids. Or you might have dreamed of taking up those elusive hobbies neither of you had quite the time to pursue.

Of course, there are many things to discuss for retirement so you can prepare for a retirement lifestyle that you both find meaningful. One thing you may not have discussed, or agreed on, is how to harmonize your grand plans with your retirement income plan. Because not only will you need money to fund that retirement wish list… You will still need income to support your everyday needs, not to mention healthcare and other potentially costly unknowns.

What will those needs be? That seems to be where the disagreement begins. According to a Fidelity Investments Couples Retirement Study, almost half of the couples surveyed (47 percent) disagreed on how much they needed to save to maintain their current lifestyle in retirement.

One reason may be the small percentage of couples who have taken time to develop a detailed retirement income plan… just 21 percent, according to Fidelity.

Talk Now or Worry Later?

What’s the best advice for couples who don’t have a clear retirement income plan that details what they will need to live comfortably and how their fixed income will be allocated? To start talking.

According to John Sweeney, a retirement and investments executive, “By taking time to engage in conversation and plan, your chances of creating a strong foundation and achieving your goals are greatly enhanced.”

Couples will fight about money at any age, but for those entering retirement, money issues can be vexing. That Fidelity survey also found that baby boomers had the highest level of disagreement about how much money they need for their lifestyle in retirement.

Backing up this finding, in a Harris Interactive poll, 36% of married 55-year-olds to 64-year-olds said money matters trigger arguments with their spouses. Comparatively, just 15% of couples ages 18 to 34 reported arguments started over money matters.

Questions to Open the Lines of Communication

To help couples get on the same page with their retirement finances, it may help to have each partner answer these questions:

• When do you expect to retire?
• How does that play into the other’s time-frame for retiring?
• What are your top goals for retirement and when do you want to begin pursuing them?
• Do you plan to continue working? Work in retirement? If so, will it be full-time or part-time work?
• Are you fully aware of the balances in your retirement accounts, bank accounts, portfolios, and other holdings?
• Do you know about all the financial resources that are, or will be, available to you?
• Do you plan to provide any financial support to your adult children while you’re in retirement?
• Will your parents need caregiving and financial support? If so, what would that look like?
• If your spouse passed, could you successfully manage your finances on your own?
• If one of you was gone, how would the other be prepared to manage their finances?

Answering these questions or even having these kinds of conversations may make one or both partners uncomfortable. A financial professional could help you bridge this gap. They can help guide you to more confident and well-informed retirement money decisions. Their assistance may diffuse tension and get you working toward creating a harmonious game plan.

Map Out Your Expected Income and Spending Goals

With apologies to Fleetwood Mac, creating long-term budget projections for your retirement doesn’t have to be a dreary task. A financial professional can help you work through the “what ifs” and details of key areas like these:

• What you are spending now on a monthly basis
• What that spending will look like in the future
• Whether your debt obligations, including the mortgage, will be paid off
• Whether you have aging parents to care for and/or support financially
• If your adult children or other loved ones will receive any support
• The price tags of “nice-to-have” items on your retirement wish list

Use this information to create an annual budget snapshot. Then, over a 30-year term, add inflation of 2 percent to 3 percent each year. Why so long? Life expectancy and mortality data from governmental and insurance sources shows lifespans are on the rise. You could well spend as many years in retirement as you did working! This will be a good starting point to see what income you will need to meet your budget.

If your spouse needs a little more enticement to participate, schedule financial “date nights” once a month, or at some interval, to discuss these and other money issues, from thoughts on updating your retirement plan to making new spending decisions.

Empower the Surviving Spouse

The time to address what happens, financially, after one spouse passes away is not at the moment of loss. It’s right now. What strategies do you have in place to maintain a surviving partner’s financial well-being?

Every couple should have an estate plan or survivorship plan that allows for income and financial efficiency once that partner is on their own. And if there are heirs and blended families, these determinations become even more critical.

To maximize retirement income as a couple, and then as a solo, be sure to evaluate your options for:

• Claiming Social Security
• Choosing pension payout options
• Formulating income strategies, especially with annuities and life insurance—what payout options or income options are on the table for future income needs?
• Alleviating costly expenses as the surviving partner ages. (There’s a 50% chance today that one spouse of a 65-year-old couple will reach age 90.)
• Long-term care insurance, life insurance with living benefits, health savings accounts, and other appropriate cost-relief programs

The question of survivorship is an important one, as people’s cognitive abilities, and their capacity to manage their finances, may diminish as they age. Not only can proactive planning mean a more efficient transition to life changes — it can also help the surviving partner through the process of grieving. 

Retirement Planning Guidance

Remember, you are in this together. You may have figured your own “money language,” or there may be retirement planning gaps to overcome. Either way, many couples have benefited from the guidance of a retirement-knowledgeable financial professional. Those with an advisor and a written financial plan report better outcomes, including more savings, more retirement confidence, and a greater sense of overall well-being.

If you would like help from a professional who can guide you, SafeMoney can assist you. Use our “Find a Financial Professional” section to connect directly with a financial professional. You can request a personal strategy session to discuss your needs and goals. Should you need a personal referral, call us at 877.476.9723.