Setting goals, creating dreams and planning where to travel are all things in life you want to achieve, but remember that significant other over there? Ya, that one. Have you considered his dreams and goals in life?
MarketWatch reports that 51% of couples argue “frequently or occasionally” about money, and of that group, 38% fail to resolve their argument in a way that satisfies both partners, according to a survey of 808 couples commissioned by Fidelity Investments. Both partners of each couple were surveyed, for a total of 1,616 people. Respondents were not told the survey was for Fidelity.
Thirty-eight percent of couples disagree on their expected retirement lifestyle, and 43% have different ideas on how often they review their retirement portfolio or retirement strategy.
“If couples aren’t aligned on their goals, then it’s really hard to have a plan to get there,” said Lauren Brouhard, senior vice president for retirement at Fidelity Investments.
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Couples need to have a map of their financial future and sail together.
“While the vast majority of the couples surveyed describe themselves as one financial entity, there are many disconnects, especially around their goals and financial expectations for the future,” she said.
Even those couples who don’t argue may not be on the same page financially. “Couples think they’re cooperating like one financial entity, but when you peel back the onion, they don’t even agree on how often they’re talking about retirement planning. One person thinks they’re talking about it and the other doesn’t,” Brouhard said.
All of the survey respondents were at least 25 years old, and all were either married or in a long-term relationship and living together. The couples surveyed had a minimum household income of $75,000 and at least $100,000 in investible assets.
The survey also found that 32% of couples disagree on whether they’ll work after they retire, and 36% either don’t know or don’t agree on where they’ll live when they retire.
Early retirees: They talk about money
A willingness to have conversations around their current financial situation — and what it means for their future — is a defining characteristic of couples who figured out how to retire early.
For example, when Billy Kaderli first proposed the idea of retiring early — they were in their late 30s — his wife Akaisha was leery. But after they talked in-depth and for a while about the financial possibilities, she was on board. Now they’re both 61; they’ve been retired for 23 years.
Still, it’s tough for some couples to initiate those types of conversations. “Talking about money and your finances can be an emotionally charged topic for a lot of couples,” Brouhard said.
Even couples who don’t argue about money may overlook basic financial information. For example, 31% of couples don’t agree on who is the main beneficiary on their life insurance policy, and 27% disagree on who is the primary beneficiary on their retirement accounts, according to the Fidelity survey.
Fidelity released the survey data in two parts — the first part was published in September. Read more on the first batch of data: Couples disagree on money, retirement plans.
Financial planners offered some strategies for couples who want to get started on planning together. Here’s what they said:
Make a list
Consider writing down your goals, and then talking together about how those goals fit in with your current and future finances.
Sheryl Garrett, founder of the Garrett Planning Network, encourages her clients to create a list — each spouse should do this separately — of the 30 things they would like to experience in their lifetime.
It might be a trip to Bali or becoming a better golfer or having more time to spend with your family — whatever it is, come up with 30 items for your wish list.
“What’s your heart’s desire?” Garrett said. “I want people to stop thinking about the money topic and think about what is it you want to do.”
Then, share your list with your partner and talk about it. “You’ll find a lot of overlap and you’ll learn some new things,” she said. “Then you can talk about priorities. Is this more important before that? That really gets the conversation flowing and then we can start working on certain issues.”
One issue, for example, might be credit-card debt. As a couple, you have to decide how to get your finances to the point where you can start living your goals.
Of course, there may be differences of opinion (read below on why it’s important to play nice, and avoid the blame game). Creating these lists “really causes us to dig pretty deep into things,” Garrett said. “I worked with a couple who had been together more than 20 years — they did this exercise and they learned things about each other.”
Your finances change, your goals change, stuff happens: that’s why one conversation about money is nowhere near enough. Garrett suggests setting up a regular family financial meeting — once a month for half an hour, children included.
“That’s a half-hour where you talk about, ‘How are things going? How can we get closer to meeting those objectives? How can we take next month and get one step closer to reaching our goals?’” Garrett said.
In other words, first get on the same page with your partner with regard to life goals, “and then break it down into bite-sized chunks, a paycheck at a time, and work together as a financial team toward your financial goals,” Garrett said.
“It really is communication, collaboration and compromise,” she said.
As many couples know, money conversations can be fraught with tension.
“The key is to listen to each other without interrupting or judging the merit of the other person’s hopes and dreams,” said Frank Paré, a certified financial planner and founder of PF Wealth Management Group LLC in Oakland, Calif.
“Listen first, then collaborate on how to stay on track financially,” he said. Read: 5 steps to jump-start your retirement savings.
And, please forgo the blame game. “What happened last week is over,” Garrett said. “You can’t undo it. If you spent a bunch of money, beating each other up doesn’t gain anything. Work from today forward.”
If you’re arguing and can’t get to common ground, it might be time to hire a professional planner. “Speaking with a professional on neutral ground is a good way for each person to hear the other’s goals and fears about their money and how they might plan for their future together,” Paré said.
Often, one spouse is in control of the finances while the other one “is just along for the ride,” Paré said.
“Aside from the spending vs. savings challenges this might cause, it can be particularly difficult for the surviving spouse if something were to happen to the person who handles the finances,” he said.
During your monthly meetings, make a point of working to understand how your partner thinks and feels about money. Also, try “to communicate in a manner that allows each to know where they are financially at any given moment,” he said.
One way to adjust your thinking: Consider you and your partner as a “financial partnership,” Garrett said.
Also, be sure to talk about investment risk. “Often, the one who handles the finances dictates the risk tolerance, and generally men are more prone to investment risk than their wives,” Paré said.
“This can be a problem because oftentimes the wives are more concerned about having a plan, and are less inclined to take risks,” he said.
Think, and talk, about the unthinkable
It’s important for couples to discuss what will happen if and when one spouse dies. “This is particularly hard, because no one really likes to think about their own death,” Pare said. “The point is to think about the impact on their surviving family members.
“It was hard for me,” he added. “However, I knew that if I didn’t take action to address the inevitable, it would be even harder on my wife and kids.”
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Original article courtesy of www.marketwatch.com.
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