When it comes to relationships, there’s generally a strong intersection between love and money. Even the most compatible couples need to compromise on how they’re spending their hard-earned income and savings.
We recently commissioned the Couples, Money and Retirement study to explore this dynamic. We surveyed both members of 1,510 couples to discover what they think about money and retirement individually and together.
Our research reveals good news: couples overwhelmingly trust each other and share the same goals for retirement. However, couples have more work to do to nail down details of their financial plans, including how much they need to save for retirement and what will happen to their money after they pass away.
While these emotionally charged topics can be difficult to navigate, we know couples who talk openly and honestly about their finances ultimately feel more confident. If you’re in a committed relationship and near or in retirement, here are some tips to help you find financial harmony with your spouse or partner.
1. Prioritize honest communication
According to our research, many couples need to align on key long-range financial planning topics. Around one in five couples told us they don’t agree on how much money they plan to:
- Provide to children or grandchildren (25%).
- Save for retirement (24%).
- Spend on lifestyle needs (22%).
Retirement is often the biggest financial goal for most people, and as with any money topic, it can be emotional and challenging to talk about. It’s vital that couples align on the details of their retirement plans by answering questions like: will you and your partner retire at the same time, or will your retirements be staggered? Do one or both of you plan to work part-time during retirement? What are your top goals once you stop working? The answers to these questions, among others, can have long-term financial implications.
2. Stop putting off estate planning
If you have yet to formalize your estate plan, you’re not alone: more than half (52%) of couples surveyed have not created an estate plan. Yet everybody, no matter the level of assets or family circumstances, needs one.
An estate plan starts with having an updated will in effect but goes far beyond that. A comprehensive estate plan can outline your wishes for trusts, lifetime gifting strategies to loved ones and causes you care about, and clear health care directives and decisions in the event of long-term care needs.
Aligning with a partner on big money matters like estate planning often takes more than one conversation. Engage a qualified lawyer who can help you break the process into manageable pieces. I also recommend that you involve your financial advisor in this process to help you consider the implications of various estate planning choices on your overall financial situation.
3. Get aligned on financial support for adult family members
Contributing to the financial well-being of adult family members — including parents, siblings and children — is more common than you may think, with 72% of couples surveyed saying they do so. Yet 15% of couples admit they haven’t agreed on the level of support.
If you’re in a position to support adult family members and want to do so, such gifts should come only after solidifying your retirement savings plan and taking into account the likelihood of unexpected events and their accompanying costs. Even the best-laid plans can go awry. Nearly one-third (31%) of couples in our research retired because of an unexpected circumstance, such as a health reason or layoff.
My advice for couples considering providing money to adult family members is:
- Communicate openly and often with your spouse or partner to develop a plan for giving so it is intentional and doesn’t jeopardize your own retirement.
- Consider the important distinction between providing one-time financial help for a big dream — such as a wedding or down payment on a home — and providing regular support for day-to-day living expenses.
- Put clear boundaries around any gifts given so that everyone involved understands where your generosity begins and ends. And, if any of your financial support is intended to be a loan rather than an outright gift, ensure you are clear about repayment expectations, including timing.
4. Find healthy ways to resolve disagreements
There’s nothing wrong with each partner having a unique point of view on a financial matter. What’s important is finding healthy ways to discuss your differences and find compromise, which is the approach of nearly seven in 10 couples (68%) we surveyed. About half (51%) find it beneficial to review financial priorities or revisit their budget when identifying a solution.
On the other hand, a quarter (25%) of respondents report that one party or the other usually gets their way. While that may be tolerable for smaller disagreements, like funding a modest home improvement or choosing a vacation spot, I strongly recommend couples work to find compromise on larger issues, like deciding when to retire or estate planning.
5. Choose a financial advisor together
Aligning your financial goals and aspirations with a partner comes with many considerations and complexities. A financial advisor can be a powerful resource to help facilitate challenging conversations, provide an objective perspective and ensure both partners’ unique viewpoints are heard.
The benefits, according to our research, are invaluable. Couples who work with an advisor are more likely to be honest and transparent about finances and feel more confident their money will last their lifetime.
It’s not a requirement for success that couples always see eye-to-eye. Rather, it’s about having open communication that builds trust. Maintaining dialogue about critical financial matters is a key ingredient to a happy, lifelong partnership.
This article was written by Marcy Keckler, Cfp® and Crpc® from Kiplinger and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.
