Couples Retirement Planning: What You Need to Know

Key Points – Couples Retirement Planning: What You Need to Know

The Key to Couples Retirement Planning Is Doing Everything Together
Setting Clear Objectives
Developing a Spending Plan and a Financial Plan
When Are You AND Your Spouse Thinking About Claiming Social Security?
12 Minutes to Read | 21 Minutes to Watch

What Are the Important Things to Know About Couples Retirement Planning?

You probably won’t hear the words “retirement planning” or “financial planning” in any wedding vows, but if you really about it, they’re even more impactful than “’til death do us part.” Why’s that? If you’re married, retirement planning done right is more than getting yourself to and through retirement. If you were to pass away before your spouse, you would want your spouse to be in good hands financially, right? And hopefully your spouse would feel the same way if they were to pass away before you. This is one of many reasons why couples retirement planning is so critical.

Retirement is a journey best taken together, but it can also bring its own set of challenges. Dean Barber and Bud Kasper want what’s best for all couples when it comes to retirement planning, so they dug deep into the essentials of what to know for couples who are retirement planning on America’s Wealth Management Show. Dean and Bud are going to help with exploring the unique aspects of retirement planning for couples so you and your spouse can discover the strategies that will help you navigate this exciting chapter of your lives with confidence.

Retirement Is Better Together

From coordinating retirement timelines to aligning financial goals and managing shared assets, we’re committed to providing guidance on how to effectively plan and communicate as a couple. Whether you’re newlyweds or celebrating decades of marriage, our goal is to empower you to make informed decisions and create a retirement plan that reflects your shared dreams. Don’t let misunderstandings or overlooked details hinder your path to a harmonious retirement.

Bud has a unique perspective on couples retirement planning. That’s because his wife, Peggy Kasper, works with him in our Lee’s Summit, Missouri office.

“Our focus is on our clients and our business. We want to make sure that the people that we have the privilege of taking care of are taken care of.” – Bud Kasper

Unless you’re in a situation like Bud and Peggy are in where you work with your spouse, most people who head into retirement will have spent 30-plus years where they spend more or just as many waking hours with their coworkers as they do with their spouse.

Reclaiming Your Identities and Getting to Know Each Other at a Deeper Level

When couples are starting to go through the retirement planning process, it’s almost like they’re getting to know each other all over again in some cases.

“I’ve seen that a lot. I’ve seen people lose their identity (because it becomes their job). Maybe one spouse stayed at home and the other spouse provided income for the family. Or maybe they both worked. Either way, there is that that aspect of being together 24/7, 365 days a year. What are you and your spouse going to do?” – Dean Barber

While Dean and Bud take couples retirement planning very seriously, it’s important that you and your significant other are having fun together during the retirement planning process as well. So, Dean and Bud are going to have a little bit of fun, too, while education you about couples retirement planning as they simulate playing The Newlywed Game.

The Couples Retirement Planning Version of The Newlywed Game

They ended up going about the game a little bit differently, but that doesn’t make what they shared about couples retirement planning any less important. Bud started the game by trying to guess the top thing that Dean runs into with couples retirement planning. Bud had the classic ran-of-out-of-time-before-writing-down-his-final-answer answer and blurted out that Dean would have him taking more time off. That obviously wasn’t what Dean’s answer was. What’s your guess for Dean’s answer?

“The number one thing I run into with couples retirement planning is that one person is scared to spend money. I see that more often than not is when one spouse is so afraid to spend that they wind up living below what they actually could. They’re scared to spend because they don’t have clarity in the future.” – Dean Barber

After thinking through it more while Dean was giving his answer, Bud thought that Dean’s answer would’ve focused on taxes. Dean already had a hunch about the top thing that Bud runs into with couples retirement planning, and what Bud told him made him certain. He guessed that Bud’s answer involved the Roth, and he was right.

Bud’s number one thing that he sees with couples retirement planning is having all or most of their money in tax-deferred traditional 401(k)s or IRAs. Those who know Bud know that it doesn’t take him long to look at whether Roth conversions can be beneficial to them with the tax-free distributions.

Reviewing Fidelity’s 2021 Couples & Money Study

Bud was really excited to review Fidelity’s 2021 Couples & Money Study, so let’s jump right into that next. This study, “analyzes retirement and financial expectations, communication, and preparedness among 1,713 couples (3,426 individuals), ages 25 years and older in a married or long-term committed relationship.”

“I thought this was an incredibly helpful and interesting piece of communication. Communication was one of the things that was talked about because it’s a critical factor in in financial success. I think that people can identify with the people that were interviewed in this survey.” – Bud Kasper

Communication Is Key with Couples Retirement Planning

How well do you think you and your significant other communicate about financial issues? Seventy-one percent of the people survey said that they at least communicate “very well” with their partner. And 25% of that group of people said that they communicate “exceptionally well.” Sixty-one percent of the people surveyed indicated that they talk about some aspect of their finances with their significant other at least each month.

Let’s break this down a little further with those in the survey who said that they communicate very well with their significant other about their finances. Here are a few more statistics.

79% of them expect to live a comfortable lifestyle in retirement.
73% of them rate their household’s financial health as excellent or very good.
64% of them discuss finances together at least monthly.
84% of them say that money isn’t their greatest relationship challenge.

Now, let’s do the same thing with breaking things down for the 29% of the people in the survey who said that they didn’t communicate very well with their significant other about their finances.

35% of them expect to live a comfortable lifestyle in retirement.
42% of them rate their household’s financial health as excellent or very good.
25% of them discuss finances together at least monthly.
59% of them say that money isn’t their greatest relationship challenge.

Why DIY Retirement Planning Can Be Problematic

So, where do you think you and your spouse would fit in for this part of the survey? What do you think are the most important aspects of communication with your significant other about your finances?

When Dean and Bud meet with couples for the first time, they oftentimes see that one of the spouses has been taking care of a lot of their finances. But it’s still extremely important for both spouses to be on the same page or couples retirement planning won’t work well.

“In my house, it’s my job to invest the money and take care of saving for retirement, college for our children, and all those things that I’ve done over the years. And it’s my wife’s job to pay the bills. I make sure there’s enough money in the checking account to do the things that we need to do and my wife makes sure to keep an eye on spending.” – Dean Barber

The Must-Knows for Couples When Retirement Planning

So, let’s walk through what Dean and Bud think are the must-knows for couples in retirement planning. You’ll probably see a theme here with these necessities.

Setting clear objectives together.
Developing a spending plan together.
Optimizing your Social Security benefits together.
Considering health care and long-term care solutions together.
Building your financial plan together.
Reviewing and discussing your retirement savings and allocations
Reviewing your financial plan with a CFP® Professional together.

There’s a lot of together time with couples retirement planning. This is important because as we mentioned, one spouse generally makes most of the financial decisions rather than them doing so together. They might think that their significant other doesn’t need to be there because they can take care of the financial part of their lives.

“We want your spouse here because most of the time we’re not talking about economics and finance. We won’t be focusing on global economic viewpoints, interest rates, or geopolitical events. When you’re working with a good CFP® Professional who’s gone through a thorough discovery process with you and is taking you through our prioritization exercise, you’re talking about life and what’s important to each spouse. I can’t tell you the number of times when we’ve gone through that prioritization exercise and seen one spouse stop and look at the other and say that they didn’t realize that something was important to them.” – Dean Barber

The CFO Spouse and the Non-CFO Spouse

Here’s another way to think of couples retirement planning. There’s usually a CFO spouse and a non-CFO spouse. The non-CFO spouse might not be talking a lot about the finances as much as the CFO spouse, but our prioritization exercise gives the non-CFO spouse a voice in the couples retirement planning process.

“It’s liberating for that non-CFO spouse to be heard in a way that isn’t about money. It’s about what they want their life to look like. We know that the money itself is never the goal. It’s how we get the pay for the goals. But if we don’t understand what’s important to each one of them individually and the highest priorities as a couple together, we can’t begin to craft that financial plan.” – Dean Barber

Couples Retirement Planning with Our Retirement Plan Checklist

There’s a really good way to start couples retirement planning if you and your significant other haven’t started communicating about it yet. We encourage you to review our Retirement Plan Checklist together. It’s full of things that you need to know, both leading up to retirement and during retirement. It includes an age-based timeline of things that you need to be aware of. Also, there’s a list of 30 yes-or-no questions that can gauge your retirement readiness. You can download your copies (print one off for your spouse and some for your children too) below.

Retirement Plan Checklist

“Have a conversation with your spouse about what you learned and get a conversation started between the two of you because that’s critical with couples retirement planning. And there’s nothing about investing in it. It’s not about investing. It’s about life.” – Dean Barber

Reviewing More of the Fidelity Study

Before we wrap up this article, let’s go over a few more of the statistics in the Fidelity study. Forty-four percent of the surveyed couples say they argue about money at least occasionally. Why would there be an argument with it? Is somebody not giving up all the information that needs to be understood by the spouse?

Well, it goes back to what Dean said. It’s because one spouse doesn’t want to spend because they’re frugal with money. And the other spouse points out that they’ve spent their lives saving and accumulating this money and wants to enjoy it. That’s what most arguments are about with couples retirement planning.

Here’s another statistic from the survey. Twenty-four percent of people in the survey said they’re often frustrated at their partner’s money habits, but let it go for the sake of keeping peace.

“It’s the humanities side of it. All parties will never be in sync with each other if they aren’t represented equally. That’s a fun thing for us to do. It sounds a little corny, but when both spouses have that ability through the prioritization exercise, you see the nuances in the relationship.” – Bud Kasper

Is Dean the Best Marriage Counselor Ever?

Bud and Dean have helped countless people get to and through retirement. At the end of the review processes, Dean has had people tell him that he’s “the best marriage counselor ever.”

“They’re saying that because of what the Fidelity survey told us—44% of people disagree about money. A good CFP® Professional is going to be a sounding board, provide common sense, and remove emotion from the discussion.” – Dean Barber

Thinking about couples retirement planning reminds Dean of a client couple that he’s worked with for close to 20 years. Every time they come in for a review, the wife asks if they can spend a little more? And every time she asks Dean that, her husband just looks at her like, “Really? You’re asking again?”

“He doesn’t like to spend, but she does. So, we need to validate if she can spend another $2,500 this year on her grandkids. I put it into the plan and it didn’t move the needle. They can spend that extra $2,500. The husband then looked at me and said, “Really?” But they can. I also reminded him that he’d told me that the most important thing to him was her. So why wouldn’t he want her to be happy?” – Dean Barber

Validating Your Financial Plan

That’s what the plan can do. It validated that they could spend more on their grandchildren. But let’s say that spending more on their grandchildren would drop their probability of success to a point where it made them feel uncomfortable. Their plan would be validating that they couldn’t spend more on their grandchildren at that time without making some tradeoffs.

When Are You Planning to Retire?

OK, here’s are a few more statistics from the Fidelity survey that Dean and Bud want to break down. Forty-eight percent of the couples surveyed disagreed on the age they plan to retire. That’s obviously a big component of couples retirement planning that needs to be figured out.

“I’ve got that situation that I’m working through with a couple right now. The husband hates his job and wants to retire. We’ve shown them that from a financial perspective that neither spouse ever needs to work again. And the wife is terrified to retire because she doesn’t know what she’s going to do if she doesn’t have work. The husband doesn’t want to retire without his wife because he doesn’t want to go into retirement alone. He wants them to do it together, so we’re working through it.” – Dean Barber

And How Much Do You Need to Retire?

Here’s another statistic from the survey. Fifty-one percent disagree on how much savings they need to retire. The thing is that it’s not a dollar amount.

“If you have a goal to accumulate a certain dollar amount and you think that’s your safety net, you’re going about the planning process all wrong. It’s all about how much you want to spend. Retirement is 100% about cash flow. Can you create enough cash flow from all resources that net after tax, there’s enough money deposited into your bank account for you to do the things you want to do and to keep up with inflation?” – Dean Barber

How Much Risk Are You Comfortable Taking with Your Investments?

OK, drum roll, please. The financial statistic we’re sharing from the Fidelity survey is that 40% of the couples surveyed said they disagreed on how much risk they’re comfortable taking with her investments. And that’s OK.

When we create the plan, we look at how much spending you want to have. We look at all the resources that you have to create that spending. Then, we come at it from a tax perspective. How do we mitigate taxes as much as possible? We maximize the Social Security. When the plan is fully built out, we finally look at the investments.

“We’ll run multiple asset allocation levels. We’ll start out at a very low risk and then increase that risk level until we get to what we call the Goldilocks portfolio. It’s the portfolio that allows you to make the plan work to deliver that income stream for the rest of your life with the least amount of risk possible.” – Dean Barber

Proper Portfolio Construction

When people see that, they’ll probably wonder what happens if the risk is increased. Does it improve it? If you increase your risk too much, it’ll decrease your probability of success. Oftentimes, there’s one person that’s way too conservative and one person that’s way too aggressive. We need to meet in the middle with couples retirement planning.

You need validation of what that portfolio construction looks like. You need to see that from a historical perspective that this is the portfolio that gives you the highest probability of achieving all your financial objectives.

“All of it is based on history. For example, we can go back to 2022, which of course was a difficult year for stocks. They were down more than 19%. It was a difficult year for bonds, too. They were down more than 13%. We ask each couple, if we were to have this experience, would you rather have a fixed return of 4% or the opportunity of making like 14% based upon how much risk you’re going to have there? They finally reach a number. They’re willing to take X-amount of much risk for X-return.” – Bud Kasper

The Risk of Being Too Conservative

One of our recent episodes of America’s Wealth Management Show was about the risk of being too conservative. We talked about how interest rates are today. But from a historical perspective, people have had too much cash and are too conservative. That will just guarantee that you that you go broke slowly.

The biggest risk in retirement is running out of money. It’s not the ups and downs of the value of your account. That’s not the biggest risk. The biggest risk is running out of money. The second biggest risk is not living the life you want.

“The biggest concern that people have is finding themselves in a position where they’re withdrawing money in retirement while the market is failing and fearing that it will ruin their retirement. That’s what I refer to as double negative compounding.” – Bud Kasper

It’s Time to Build Your Very Own Comprehensive Financial Plan

One way or another, having a financial plan will give you a concrete answer. So, if you don’t already have a comprehensive financial plan, what are you waiting for? After all, you can begin building your plan from the comfort of your own home and at no cost or obligation with our industry-leading financial planning tool. And like we’ve said throughout the article, you need to build your plan together with your significant other. You can begin building your plan with your partner today by clicking the “Start Planning” button below.

START PLANNING

Whether you’re more of a CFO spouse or a non-CFO spouse, everyone has questions throughout the financial planning process. Being together with your significant other to ask those questions to a CFP® Professional is critical. To get more confidence, freedom, and time with your spouse in retirement, we encourage you to schedule a 20-minute “ask anything” session or complimentary consultation with one of our CFP® Professionals. We can meet with you in person, virtually, or by phone to help ensure that you and your significant other are on the same page with couples retirement planning.

Couples Retirement Planning: What You Need to Know | Watch Guide

Introduction – 00:00
Dean & Bud Try to Play the Newlywed Game – 02:35
Communicating Well & Retiring Well – 03:36
Our Must-Knows for Couples – 06:13
The CFO Spouse & Non-CFO Spouse – 09:01
Retirement Disagreements – 15:16
Biggest Risk in Retirement – 19:49

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The views expressed represent the opinion of Modern Wealth Management an SEC Registered Investment Adviser. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.