Estate Planning

Why Spouses Should Be Planning for Retirement Together

By Modern Wealth Management

February 13, 2020

Why Spouses Should Be Planning for Retirement Together

Planning ahead is important, especially when it comes to retirement. However, many spouses planning for retirement don’t plan together. Instead, opting for one spouse to quarterback the retirement plan for the both of them. The problem with this game plan is that it takes two to tango, and it takes two to build a retirement that works for both parties. There are many reasons why spouses should be planning for retirement together, so let’s discuss some of them.

Let’s start with a real-life example of the importance of planning together. This comes from someone Dean interviewed for America’s Wealth Management Show. For this example, we’ll call the woman involved Jane. Jane’s husband had been planning their retirement and finances for their entire marriage. When Jane’s husband passed, she was lost, didn’t know what to do, who to talk to, or where to go next. Because Jane and her husband didn’t plan together, she was put in a situation where she didn’t have the knowledge necessary to make her next move when it came to her finances.

At some point Jane went to a financial planner and got a questionnaire only to realize she couldn’t fill it out. The planner then said he’d help her and asked her some questions, but Jane just didn’t know how to answer his questions.

Regardless of which spouse leaves us first, this illustrates why it’s so important to plan together. So, let’s start with the less fun stuff like estate plans, insurance, health care, taxes, etc.

Spouses Should be Planning Retirement Together for Your Entire Family

It goes without saying that losing a loved one is tough, but grieving is often interrupted by other things. No one wants to be focused on finances, legalese, or insurance companies while they’re enduring a loss. Having a complete and current estate plan is of the utmost importance when you’re trying to do what matters most, spending time with your loved ones.

Giving the gift of a proper estate plan is something they will greatly appreciate. Without one there is a risk of probate court – a long and expensive experience. So, help your family avoid the headache and build a plan together with your spouse. If you have more questions about estate planning, Dean Barber and our estate attorneys recorded two episodes of The Guided Retirement Show. They cover wills and probate as well as problems with getting an estate plan prepared online.

Plan Your Insurance and Health Care Strategy

Does life insurance make sense for you and your spouse? Will either of you have a need for long-term care? These are things that need to be discussed as a couple so that you’re on the same page when or if something happens to either of you. You also need to make sure you’re adequately covered on the property and casualty side of things.

What happens if both of you decide you want to retire but you’re too young to enroll in Medicare? You need a plan. Speaking of Medicare, if you are old enough to enroll, do you know all your options? Health care planning is a huge deal, and with those costs projected to rise by 5.5% year over year for the next decade – you better have a plan that puts you and your spouse in control.

Planning Your Taxes in Retirement Together

So often, we have an awkward conversation with couples, because they come in and they think they’re going to be married forever. They think everything’s going to be the same forever. Well, we all know that that’s not usually the case. One of the spouses is going to be the surviving spouse. The problem is, the bracket size is about half at the single level as they are for married filing jointly.

So, surviving spouses go up to a higher tax bracket with nearly the same income. One of the spouse’s Social Security will be lost, but everything else stays about the same. So, the surviving spouse could be in a much higher tax bracket forfeiting more money to Uncle Sam every year. All of this at a time when one of those Social Security checks goes away. You have to plan for this scenario.

Know Where the Documents Are Located

One thing to make sure you have in both your estate plan and your insurance strategy – make sure you both know where the documents are located and who you need to talk to in the event of an emergency. In our experience, we’ve seen many misplaced documents leading to problems. It could be as simple as an old life insurance policy tucked into a drawer and not included in an estate plan throwing that plan into probate. Make sure both spouses know where things are to avoid these issues.

Planning Your Retirement Time Together

Okay, now that we have a lot of the less fun out of the way it’s time to discuss planning your retirement time together. What are you going to do with your time? Do you have places you want to travel to? What about philanthropic goals? Are you planning to cover any grandkid’s college expenses? How often do you think you’ll each need a new vehicle? What about your living situation?

Phew, that’s a lot of a questions. It can be overwhelming sure, but this is the fun part, right? Setting goals for your future can help your financial planner layout a plan to achieve those goals. So maybe you want to take a trip each year as a couple, but every five years take your whole family on your dime. Let your financial planner know these plans so they’re able to show you how these plans will affect the success of your overall plan.

Planning the fun stuff like travel together might not be that hard, but what about the days you aren’t traveling? What are you going to do with your time? Oftentimes, the expectations for retirement are grandiose, but the reality can be monotonous. Know how you plan to spend your time, both together, and apart and discuss that with each other. If you’re both on the same page with your plans in retirement it will help you make the transition together.

Spouses! Planning Your Retirement Living Situation is Paramount

Do you want to downsize when you’re both retired? If so, where to? Is it a house or an apartment? This type of conversation needs to be had as a couple approaching retirement. You might find you have different opinions on the matter, so it’s best to know what your plan is going to be before you get there.

What about the living situation as you age or if one of you passes on? Will either of you need to be in a retirement home or long-term care facility? Again, it’s best to have these conversations now while you’re both able to discuss them and include them in your overall retirement plan.

Diamonds Are Forever, but Planning is Priceless

As many couples do when they get married – their bond is signified with a diamond ring, pledging an oath to be together forever. In sickness and in health, and all that wonderful poetry. It’s a beautiful thing we do as human beings, and when we make such pacts, we should keep them.

The problem? Our “forevers” rarely end at the same time. More often than not, one piece of that love is left to fend for themselves at some point. Obviously, we don’t enjoy planning for these scenarios, but do you want to leave your loved one behind without a plan?

A promise is a promise, and even if your forever isn’t as long as your spouse’s – it’s still your responsibility to make sure they’re in the right hands and know what to do when you’re gone. Help each other by doing the difficult parts and the fun parts together. Planning together is better for everyone involved, the spouses, the heirs, and the lost.

Honestly Discussing Your Plan Together

At Modern Wealth Management we do something called an Honest Conversation™, which is essentially a prioritization exercise for your life. This exercise is specifically designed to teach each spouse how each other feels about money and the inner priorities they place on life matters.

It’s something we do to get an idea as financial planners what your goals are on an intimate level in a comfortable environment. If an Honest Conversation™ sounds like something you would like to try, feel free to schedule a complimentary consultation below or call us at 913-393-1000. We’ll set up a meeting with one of our financial planning teams to get both spouses planning for retirement together. Because planning together is better for everyone.

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Investment advisory services offered through Modern Wealth Management, Inc., an SEC Registered Investment Adviser.

The views expressed represent the opinion of Modern Wealth Management an SEC Registered Investment Advisor. 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.