10 Ways to Win Retirement Planning with Your Spouse

by | Jun 21, 2019

Despite retirement feeling like a long way off, you should be taking advantage of the gift of time (and compound interest!) by starting to plan now.

If you’re married (or soon to be), you’ll need to factor your spouse into your retirement strategy. Even though joining forces can introduce new complications to the planning process, you can design a plan for mutually blissful golden years.


Get on the Same Page

Before you start crunching numbers, take a moment to think big picture. Imagine what an ideal retirement looks like and share that with your mate. Be sure to include timing (who retires first and when), location, and lifestyle (how luxe the living should be).

Are you even in the same ballpark? If so, great — you’re ready to dive into the details. If not, what compromises can be made?

Remember, while some financial independence from one another is healthy, retiring together is a shared dream and responsibility. Once you get in alignment, you can push each other towards achieving your best life.


See Where You Stand

Now that you’re both drooling over the same vision, it’s time to find out what it will take to bring it to fruition. Together, project how much you’ll need to fund your preferred retirement lifestyle.

You can get a good idea by estimating your monthly living expenses and then plugging that number into a retirement calculator like this one. In addition to your future cost of living, the calculator will account for a number of parameters like your current savings, taxes, inflation, and social security. It will give you a snapshot of where you are and if you’re on pace to hit your goal.


Chart Your Course

Using the results from the retirement calculator, you can create a plan of attack. You know how much you need to save. It’s just a matter of logistics at this point. At this stage, it’s a good idea to think about things like:

  • Level of Expertise: If one of you is more money savvy than the other, it’s time for the informed one to play tutor. Having the same degree of financial prowess will enable you to have deeper discussions and plan more effectively. Plus, if one of you passes away or becomes unable to participate in the planning process, the other can confidently take over.
  • Investment Options: Where you put your money impacts how it will grow and how much risk is involved. Be sure that your collective investments align with your goals and are properly diversified.
  • Tax Strategy: Your investments are governed by tax laws. By using them to your advantage, you can construct a portfolio that minimizes your tax liability both now and in retirement. For example, contributing to your employer’s retirement plan pre-tax helps you save on taxes now. Conversely, opening a Roth IRA, funded by after-tax dollars, results in tax-free principal withdrawals in retirement.
  • Family Planning: If you and your spouse plan to have children, will one spouse stay home? Will you use daycare services? Daycare is costly upfront, impacting your current cash flow and ability to save. On the other hand, one parent staying home will impact their long-term earning potential, which also reduces the amount available for retirement savings. Depending on your situation, it could be prudent to check into a spousal IRA.
  • Social Security: While there’s concern about the long-term viability of social security, it’s a good idea to understand how it could impact your retirement. For instance, collecting social security before the maximum benefit age (now considered 70 years old) will result in a reduced monthly payment. To see how much social security you could be eligible for (based on your earnings to date), create a free account here. While unpleasant to think about, you should also learn about survivor benefits.
  • Age and Health: If you’re both roughly the same age and in great health, this one’s less of a concern for you. But if one spouse is significantly older than the other, or if one (or both) of you is in poor health, that needs to get factored into your plans. A big age difference between you and your spouse could mean years alone for one of you, and health concerns will equate to higher medical costs. Either scenario will impact your retirement budget.
  • Estate Planning: Unless your spouse signs a waiver, they’re automatically the beneficiary of your 401k should you pass away. However, in many cases, an IRA can be left to anyone. Keep these rules and your state’s laws in mind as you name beneficiaries on your retirement accounts. Further, having the appropriate documentation (think will, power of attorney, and advance care directive) in place ahead of time, will allow you to honor each other’s wishes should one of you die or become incapacitated.
  • Divorce Planning: Of course, you plan to be together forever. But the reality is that many marriages fail. While you don’t need to include this point in your planning together (that could be awkward), you should both get familiar with what happens to assets in a divorce. Losing (or gaining) wealth as a result of marriage dissolution will absolutely impact your retirement plans.

Pro Tip: As time goes by, be sure to have regular money check-ins to see if you’re on track — and still strategically aligned.


Final Thoughts

When you get married, money matters should be handled collectively to include retirement planning. Even though there may be more moving parts to keep track of, your unified efforts can create the best chapter in your lives.

Tell Charlie: How are you and your spouse (or betrothed) planning for retirement together?

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