Have you talked to your spouse about when and where you will retire? If you have, that puts you way ahead of the majority of Baby Boomers who, caught up in the day-to-day pressures of work and family, continue to save for retirement, but tend to avoid talking about it. If you and your spouse have had detailed retirement conversations and actually agree when you will retire, you are in a truly elite group. A May 2011 study by Fidelity Investments found that well over half of couples–62%–disagree on the timing of their respective retirements. Further, one-third (33%) of couples either don’t agree, or don’t know, where they plan to retire. And nearly half (47%) of couples approaching retirement don’t agree on whether they will continue to work part-time in retirement.
Strikingly, the Fidelity study illustrated that couples approaching and living in retirement fail to agree on a retirement specifics because they struggle to communicate about retirement. For example, the study found that less than half of couples (41%) handle retirement investment decisions jointly. And I’m betting that this isolated decision making is at the root of the study’s finding that just 17% of couples are completely confident that either spouse is prepared to assume responsibility of their joint retirement finances, if necessary, as well as the fact that three quarters (73%) of all couples disagree on whether they have a detailed retirement income plan.
Given this troubling lack of communication and conflicting timelines and goals, it’s not surprising to learn, as Kathleen Hughes reported in a recent Wall Street Journal article “He Wants to Retire…but She Doesn’t,”that only about half of couples retire within two years of each other. While you would expect differences in situations where there is a significant age difference between husband and wife, disagreements also develop when one partner enjoys her work while the other wants to quit, or is laid off. In fact, often, women who postponed their careers to raise children find they are just hitting their stride in the workforce when their husbands are ready to check out of the 9 to 5 world.
Of course, couples being out of sync on the timing of retirement also results from the simple fact that opposites attract. Savers marry spenders. Planners find themselves living alongside dreamers. Risk lovers fall for the risk averse. Therefore, as retirement time approaches, in addition to deciding which retirement accounts to tap first and how much of their retirement savings to withdraw on an annual basis, couples have plenty of personality issues and non-financial decisions that have to be factored into their retirement planning.
To begin these multi-faceted retirement planning conversations, I encourage couples to ask themselves:
- When and where do I want to retire?
- What will our daily lifestyle be like?
- How often will we travel?
- How much time will we spend spent visiting children and grandchildren?
- Will we sell our house?
- Will volunteer work be important?
- Will we work part-time? For how long?
- Are our energy levels compatible?
For additional questions and a retirement planning checklist, check out this online interactive quiz from Fidelity.
As with the financial planning we’ve done together, it’s important for each person to identify their personal retirement goals and attempt to mesh them with their spouse’s. Your joint retirement date negotiations will involve a number of variables–age differences, job satisfaction, career aspirations, family responsibilities, and gender roles. To ensure that your retirement plans reflect your goals and seem realistic and agreeable to your spouse, each person needs to truly listen to the other’s viewpoints and commit to working together to plan ahead. In fact, in addition to setting retirement start dates, it’s also helpful for you to project what retirement will look like for year one, as well as five, ten, and thirty years down the road.
Participating together in retirement planning sessions years in advance of the big event provides a useful framework for important discussions and facilitates decision making that ensures you make the most of your retirement savings. Because you have worked hard and successfully saved for retirement, I urge you take the time to jointly discuss your plans so you can fully enjoy your Golden Years. Of course, I recommend consulting with your financial advisor to discuss your retirement goals and obtain advice to enhance your retirement experience.