No matter the background or details of your relationship, the key to success as a couple is always communication. This is true in all aspects of your life together, but especially important when it comes to discussing your expectations and plans for your retirement years. Surprisingly, many couples have never sat down and discussed the particulars of what they expect from retirement, and then find themselves surprised to find that they have different understandings or desires for when they’ll.
Being on the same page is essential in order to make sure that you are properly prepared. To that end, here is a checklist of topics that you need to discuss and agree on in order to be well prepared for your future.
What are your expectations for retirement?
How you’re going to conduct your life after you’re no longer earning a salary is something that you both have to agree on. Sometimes one partner anticipates that they will live more frugally while the other anticipates spending a golden retirement travelling and experiencing the things that have been put off during their earlier years.
2. Retirement Date:
Make sure that you both have the same understanding of when you will retire. If one of you is anticipating beginning your life away from the workplace at 65 or younger, while the other is planning on working until they are no longer able to, an agreement or understanding must be reached – and if you decide on an earlier date, you need to make sure that you have the appropriate resources to fund the lifestyle you’ve agreed upon.
3. Understand what Retirement Entails:
Many couples enter retirement without having given thought to health care, how long they anticipate living, how they will pay for things while conserving their capital, and what they will do in case of medical emergency. It is important that both partners have a good understanding of the risks and challenges of retirement.
Come Up with a Plan.
The key to having a retirement plan that works does not rely as much on expert advice or adequate capitalization as it does on working together as a team. Both members of a couple not only need to be in agreement, but also to be actively engaged and equally knowledgeable about your financial plan.
Create a Plan: If you do not currently have a plan in place, it is time to do so, and that means understanding what your goals are, what you’re anticipating in terms of health and lifespan, where you want to live, and how much you may want to help adult children or grandchildren. By working together you will take advantage of your individual strengths and minimize the risk of leaving out something that is important to both of you.
Understand What you Have: Far too often one member of a couple has been the only one involved in the financial aspects of their relationship, leaving the other without a good understanding of what their portfolio holds or what is a fair expectation for their retirement lifestyle. By identifying all bank accounts and holdings as well as all debts and risks, both members of the couple are able to cope in case of illness or death. When both members of a partnership are aware of what the assets are, what type of income can be anticipated and where there might be a shortfall, you will be better able to come up with a solution to anticipated (or unanticipated) problems. This may mean accelerating savings before retirement, coming up with additional sources of income such as a part-time job of purchasing an annuity, or even purchasing an investment property.
Be Realistic About Risks in investments with your IRA LLC
Many couples discuss retirement in terms of spending more time with family, travelling to exotic locales or relocating to a warmer climate. Though these are all rewards that you may have earned, it is also important to be realistic about the risks that face retirees and make sure that you’re prepared. This means knowing exactly how much you’re depending upon Social Security and other income sources that may not be as secure as you initially anticipated, understanding how inflation or downturns in the market may have an impact on your ability to withdraw from your existing capital, and how the possibility of illness or the need for long term care may need to be funded. Make sure that you understand entitlements like Medicare, find out what your costs would be for insurance under COBRA, and assess whether you can afford or will need private insurance. Many couples also purchase insurance to cover such expenses as home health care.
When in doubt about the wisdom of your financial plan, it’s always a good idea to consult a trusted expert. But by doing so together, you maximize your chance of securing the retirement that you both want.