A Journey to Retirement, Together

Author: AB Staff

A Journey to Retirement, Together

Editor's Pick Finances Relationships

Now that you’re married, no decision is as simple as it once was. On top of that, you have more decisions to make: planning for your first home, your savings funds, possibly kids, college funds for said kids, and so on. Perhaps, if you’re more of a strategist than the average American, you might even consider retirement planning. In fact, most significant financial decisions you make have a direct impact on your retirement. However, as with anything else, planning for retirement isn’t something you can tackle without considering the needs and desires of your partner. Below are five steps to getting started on the seemingly daunting task:

  • Establish Mutual Long-Term Goals

Have an extensive conversation about goals that you can realistically accomplish. One of you might be content staying in the suburbs, while the other has always dreamed of a lavish retirement on a far-off island. Plan the timing your retirement. You may love your job, but your spouse might be counting the days till her 67th birthday. It is essential to start discussing financial plans early so that you have enough time to negotiate a reasonable compromise.

  • Act on Your Commitment to a Healthy Nest Egg

Now that you’ve established definitive goals, start saving together. Determine whether or not you’re both enrolled in a 401(k) program. If you are, discuss how much of your income you need to stash away to achieve your retirement goals. Some couples might need to select the maximum contribution, while others might be satisfied with a mere 4% contribution and an employer’s match guarantee. If one of the partners in a marriage is unemployed, perhaps discuss a Spousal IRA which will create a tax-deferred fund for the unemployed partner. Lastly, discuss adjusting your day-to-day spending in accordance with your retirement goals.

  • Claiming Social Security

You don’t just have your own social security to think about. Keeping in mind each other’s ages and the ages of each other’s claims, you can design a concrete plan which results in the maximum possible payout for your family as a whole. Your social security benefits also include spousal and survivor benefits, which allow payment of your benefits to family members in case of your death.  Lastly, remember that the longer you hold off on the acceptance of social security benefits, the bigger the benefits.

  • Beneficiaries and Estate Planning

As most of you will remember, and some of you will soon come to learn, everyone has to select one or more beneficiaries when first registering for their 401(k). These beneficiaries will be awarded your retirement benefits in the event of your death. Ensure that said beneficiaries are updated following major life events such as marriage, birth of children, or divorce. In addition to your retirement funds, your other assets should also have so-called “beneficiaries.” More than anything else, it is crucial to create a will and assign a power of attorney in the vent of your death.

  • Sharing Income Needs in Retirement

The last thing a couple needs in retirement is to argue over who’s contributing more to the household and who’s squandering the retirement fund. An easy solution, we think, is to share your expenses. Obviously, certain individual expenses such as student loans, cell phones, and credit cards should remain separate. However, joint expenses such as mortgage(s) and groceries require a mutual commitment. A fair technique is to divvy up joint expenses is to split them based on income contribution. Take your income, as a percent of the total household income, and that’s how many percent each partner needs to contribute to the joint bills. The most effective way to split the bills and contribute an appropriate amount is to open a joint checking account and pay the proportionate amount of each bill. Many couples attempt to split the bills in a manner which I find to be rather unequitable. In scenarios where one partner is paying the rent, while the other pays a plethora of smaller bills, the difference in contribution can vary on a large scale.

Saving for retirement as a couple can be a daunting task, but not if you start early and do your research. Take advantage of the abundance of resources, ranging from professional financial advisors to self-help books and community blogs. Glance through the guide to wealth management available in the Age Brilliantly directory or subscribe to some of the many free newsletters available online.