4 Retirement Risks That Can Catch Couples Off Guard
Planning retirement as a couple isn't simply double the work — it often means balancing three separate visions for the future.
"Each person's vision — the 'me' — and the combined vision — the 'we' — all need to be planned for," said Stephen Dunbar III, executive vice president at the Georgia Alabama Gulf Coast Branch of Equitable Advisors.
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When building a shared retirement plan that can support them both, many couples run into surprises that can derail even well-funded retirement plans. Here are some of the most common retirement challenges couples don't see coming, and how to prepare for them.
Retirement Goals That Don't Match
It's important to spend time thinking through the costs of your detailed retirement plan so you can adequately fund it, and avoid conflicts and competition for resources in retirement.
"I worked with a couple where she wanted to relocate from the U.S. to live full-time in Paris after retirement, while her spouse was planning to retire in their current home in the U.S.," Dunbar said. "They talked this through early enough to build a financial plan that supported her desire to live in Paris, his vision for who he wanted to be in retirement and what they would do together."
Failing To Communicate and Document Decisions
A lack of communication can derail a couple's retirement planning.
"It's the well-known phrase among couples: 'Remember, we talked about it,''' Dunbar said. "I've seen too many couples think that because he or she said something, the other person heard it and agreed with it."
To prevent this communication breakdown, he recommends bringing in a professional third party.
"Work with an advisor to have these conversations backed up by a written financial plan, so it is clear what is actually being agreed to," Dunbar said.
Not Having a Plan for How They'll Spend Retirement Savings
Many couples spend decades focused on saving for retirement but give much less attention to how they'll actually turn those savings into income.
According to Dunbar, a robust income distribution planning includes:
When to take Social Security and who should claim first
How Medicare factors into the retirement plan and how much it will cost
When and how much to take from the three retirement buckets: a 401(k) or similar tax-deferred account, investments or similar taxable accounts, and a Roth IRA or similar tax-advantaged account
How long-term care costs will be handled, both in terms of where services will be provided and how those costs will be funded
How sequence-of-returns risk will be managed
Family Money Requests That Can Threaten Retirement Security
A common curveball couples face in retirement is when kids, extended family or friends ask for money. This is why it's so important to build the ability to say "no."
"Although it can be emotionally difficult, saying 'no' can save the financial plan," Dunbar said.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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