Retirement Planning for Couples: Avoiding Common Missteps

Retirement should be a time to enjoy life together, not a source of stress and disagreement (leave that to choosing where to go for dinner). While most couples share common financial goals and trust their partner on money matters, challenges still arise when it comes to key financial decisions.

Key Takeaways

• Open and regular communication about retirement goals helps prevent misunderstandings.
• Both partners should be involved in financial decisions to ensure long-term stability.
• Planning for healthcare, long-term care, and taxes is essential for a secure retirement.
• A shared spending plan can help balance different financial priorities and expectations.

Where Couples Disagree

Consider a 2024 survey of more than 1,500 American couples, ages 45-70, who have retired within the last decade or plan to do so in the next 10 years.

Although most couples agreed on most things, it found:

• 25% of couples disagree on spending for experiences, travel and hobbies.
• 25% of couples are at odds over how much to allocate for children and grandchildren.
• 24% of couples have different views on how much total income they need in retirement.

While many couples navigate financial differences through discussion and compromise, not all do. A quarter say that “one of us gets our way,” while another quarter simply “agree to disagree.”

Why It Matters

Having a financial plan that both partners actively participate in is required for long-term success. When one spouse makes the bulk of financial decisions, the other may feel disconnected or unprepared to manage finances if circumstances change.

At Advance Capital Management, we make it a priority to involve both spouses in every financial discussion. This ensures that both partners:

• Understand their full financial picture.
• Feel confident in the decisions being made.
• Are prepared for unexpected life changes, like the untimely passing of a spouse.

It helps to understand where couples often go wrong – and what steps to take to patch up any mistakes.

Common Missteps and How to Avoid Them

1. Not Communicating About Retirement Goals

Many couples assume they’re on the same page about retirement – until they realize one envisions traveling the world while the other wants a quiet life close to home.

Fix: Have open conversations early and regularly about what retirement looks like to each of you. A good place to start? By downloading and working on our free The Couple’s Financial Commitment Worksheet.

2. Ignoring Income and Spending Differences

Disagreements over how much to spend and save in retirement can create tension, especially when one spouse is more frugal than the other.

Fix: Develop a spending plan that reflects your shared priorities. Make room for both practical expenses and enjoyable experiences.

3. Only One Partner Handles the Finances

Even now, it’s common for one spouse to take the lead in financial matters. But this can leave the other vulnerable in the event of illness or death.

Fix: Both spouses should be familiar with the couple’s finances, including investments, income sources and estate plans. Regular financial check-ins together can help bridge knowledge gaps.

4. Overlooking Healthcare and Long-Term Care Costs

Many couples underestimate healthcare expenses. After all, it’s not a fun way to envision your future. But it can become a significant burden in retirement, if you’re not prepared.

Fix: Plan for healthcare costs, including Medicare, supplemental insurance and potential long-term care needs. Having a strategy in place will protect your assets and ease the burden on your spouse.

5. Not Planning for Taxes

It’s unlikely both spouses will come to retirement with the same financial situation. You have different jobs, different incomes, different retirement plans, etc. That means your tax situation could be complex. And, taxes can take a big bite out of retirement income if not managed properly.

Fix: Work with a financial adviser to create a tax-efficient withdrawal strategy from your retirement accounts. Roth conversions, strategic withdrawals and charitable giving strategies are some options that may help reduce your tax liability.

Bottom Line: Strengthening Your Retirement Together

When both partners are actively involved in financial planning, retirement becomes more fulfilling and secure. A financial adviser can help facilitate these conversations, ensuring that both partners feel heard and prepared for the road ahead.

At Advance Capital Management, we guide couples through these critical financial decisions. Our team is here to help you create a plan that supports both your dreams and your financial security.

Want to get on the same page about your retirement? Schedule a conversation with us today.