New research published by a major financial firm has revealed that couples heading toward retirement have very different ideas about how their lives will unfold after they stop working. In a survey of 500 people born between 1937 and 1964, more than 30 percent of couples gave complete different answers to questions about what age they will retire, their expected lifestyle in retirement, and whether they intend to continue working in retirement.
Maybe they plan to head off into the sunset in completely opposite directions. Don’t laugh. Some couples see retirement as a time to do their own thing. She wants to travel; he wants to stay home. She wants to keep working; he wants to start checking off items on his things-to-do-before-I-die list. She wants to live in the city; he wants to live in the country.
As long as baby boomers are rewriting the rules on retirement – partly out of economic necessity, partly because they see total retirement as boring and unfulfilling — why shouldn’t couples rewrite the way husbands and wives retire? If they want to do different things, and if both spouses are happy with the arrangement, who are we to say it’s wrong?
The danger comes in not having the same understanding of their finances. As long as they are married, which means filing a joint tax return, each having the right to claim the other’s pension benefits, and assorted other legal and financial rights and obligations, they really need to be on the same page with regard to their financial plans. And that’s not happening for a lot of couples.
In the area of pensions, the survey showed that 70 percent of husbands and wives knew at what age they can draw from their own respective pensions. But when asked when they thought they could draw from their spouse’s pension, 60 percent of men – and only 37 percent of women — knew when they could begin drawing income from their spouse’s retirement plan.
Only 23 percent of couples responding to the survey reported joint involvement with their finances. Of these, the majority (62 percent) are unprepared for the unexpected, lacking life and long-term care insurance and not having established wills and estate plans.
I think it’s fine for couples to do their own thing in retirement. If they want to keep their finances separate, that’s fine too. But every married person should understand how he or she will be affected by the death of a spouse, and that means knowing about sources of income, assets, liabilities, and insurance policies (or the lack thereof) which can either make or break the surviving spouse’s retirement.
Of course, most couples hope to ride into retirement together and enjoy the fruits of their labors for many years to come. For these couples, not talking about plans and finances is simply inexcusable. Ask yourself and your spouse:
- When do I want to retire? When do you want to retire?
- What shall we do during retirement? Travel? Volunteer? Work? Do nothing?
- Where will we live during retirement?
- How much income will we need during retirement?
- Will we have enough? If not, what do we need to do to accumulate the necessary funds?
- What haven’t we talked about that we need to discuss?
Bambi Holzer, president of Bambi Holzer Financial Group, is the author of four books on personal finance. She is a Certified Specialist in Planned Giving (CSPG), a Certified Estate Advisor (CEA), an Accredited Investment Fiduciary (AIF) and a Registered Representative with Brookstreet Securities Corporation, member NASD, SIPC. She can be reached at 877-905-3100. This document is for informational purposes only and should not be regarded as a recommendation, an offer to sell, or a solicitation of an offer to buy any securities. Specific recommendations are made only based on review of a client’s individual investment portfolio upon request. This document is the opinion of the authors and does not reflect the opinions of Brookstreet Securities Corporation. Past performance is not a guarantee of future results. Investing in narrow economic sectors involves its own characteristic set of risks including, but not limited to, the risk of loss due to the inherent lack of diversification associated with concentration of assets in a specific, sometimes, emerging field.
