How to discuss money with your spouse

Start your retirement on the same page

Remove the stress of talking about money by talking about money

Have you and your spouse talked about your retirement plans lately and whether you're on track to fund them? While discussions around financial issues can sometimes be uncomfortable or a cause of stress for couples, creating a joint plan for the future is essential for a retirement lifestyle that could make both you and your spouse happy in the years to come.

Start by talking realistically about the future

Talk about what's important to each of you - your hopes and dreams for the future. Have a conversation about when you want to retire, where you want to retire and what you'll do when you retire. Will you travel around the country or the world? Will you stay in your home or move somewhere else? At what age will you retire? What hobbies or activities do you want to make a priority? Whatever the case, discuss different scenarios about what you and your spouse envision for a lifestyle after full-time employment and what it will take for each of you to feel safe and satisfied with your situation.

Work together to create a plan that's comprehensive and reasonable

Once you've decided as a couple what you want, it's time to decide the best way to fund your retirement. Chances are, one or both of you have a 401(k), IRA rollover or pension plan (if any) from a former employer. You may also have savings or other sources of potential income you've built up throughout the years, and it's important to review everything to get a clear picture of your financial situation now and what you want it to be in retirement.

You'll also want to take your entitlements to Social Security into account. Social Security benefits are usually one of the largest sources of income1 retirees accumulate. Because the benefit amount will vary depending on what age you are when you begin to claim those benefits, be thoughtful of when you'll tap this resource. Currently, if you claim at age 62, your benefit will be reduced by about 25% from what it would be if you claimed at age 66. And, if you wait until age 70 to claim, your monthly benefit could go up even more. Because benefits go up the longer you wait to claim, the higher earning spouse might want to delay claiming benefits as long as possible, since it may mean bigger checks while you're both alive and for the surviving spouse if one of you passes away.

Talk about the role investing will play in achieving your goals

As you're consolidating your various sources of income, you may discover that your combined portfolio exposes you to more risk than one or both of you may be comfortable with. You may also find that your investments overlap. Remember that investments that each of you picked in your 401(k)s, IRAs, etc., all affect your total returns. Look at the overall asset allocation of your household and make sure it leans towards what's needed to cover the lifespan of the younger spouse.

It's important to sit down together and take a look at your goals, find commonality and then work with your financial advisor to create a plan to reach them. Once you know how much money there is, you can estimate a reasonable withdrawal rate based on your projected retirement ages and how long the money needs to last. Given all the events of the past few years market ups and downs, decline in home values, layoffs, etc. - getting on the same page is even more critical to help make sure you create a lifestyle in retirement that will satisfy both of you.

Partner with your financial advisor

Gathering all the details of your financial assets and spending commitments can be overwhelming. With specialized planning tools, your financial advisor can help you stay objective and focused when discussing your investing and spending needs in retirement.

The information contained herein is being provided to you for educational purposes only and is not intended to constitute investment, tax or legal advice nor a recommendation or solicitation to invest in any investment product. The general information contained in this publication should not be acted upon without obtaining specific investment, legal and/or tax advice from a licensed professional.

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