Are YOU On the Same Page?

Originally published August 2007

By Todd Washburn, CFP®



I often define Life Planning as “financial planning enhanced”.  The enhancement can encompass many areas, from better goals clarification to values articulation to integration of core beliefs into financial decisions.  But one area in particular where a Life Planning approach to finances absolutely enhances the experience and results is in the area of communication.  The importance of this has been highlighted by two recent surveys involving couples and their beliefs and plans for retirement.

 

            One survey, conducted by Fidelity Investments, surveyed 503 couples between the ages of 43 and 70.  22% of the couples disagreed on something that would seem pretty simple to agree on- whether or not they work with a financial planner.  Maybe it’s because it seems everyone says they’re a financial planner.  I assure you, my Life Planning clients both know they’re working with a planner.  Another unsettling result seen from another survey conducted by Mainstay Investments- 81% of married women say the believe they participate equally in financial-planning decisions with their spouse. Only 44% of the husbands said that.

 

            Some other results of these surveys:

 

o   41% of couples responded differently when asked whether one or both of them will work in retirement

 

o   Only 39% of couples agreed on what would be the primary source of income in retirement

 

o   Of couples who say they don’t partner in financial decision-making, only 1/3 showed more than limited preparation for retirement- including an income plan, life insurance and wills and estate plans.

 

 

Some encouraging points:

 

o   Couples who do work together in planning their finances tend to be more optimistic about retirement and prepared for unexpected events.

 

o   As couples age they tend to reach more agreement about their finances, with those ages 62 to 84 in better agreement than those ages 28 to 42.

 

One point of agreement- 70% of couples in the Fidelity survey agreed that health-care costs in retirement are a major worry, and 47% think it’s their biggest concern.

 

The take-home messages from these surveys?  Communication, early and often, between spouses and partners is very important for both better preparation for and comfort in retirement.  Unfortunately, I think too often both couples and many financial advisors focus too much on the numbers- the investment returns, the amount in the investment account, the salary- to the exclusion of conversations and exercises designed to address the discrepancies highlighted in the surveys.  Couples need to take the time and make the effort to talk about these issues.  They need to make sure they’re on the same page- the earlier the better- and if not to work to do so, on their own or with the help of a trusted advisor willing and able to guide these conversations.  It’s not all about the numbers.  It’s not all about the money.  But part of it better be about communication and being on the same page.

 

If you or someone you know is struggling with these issues, or just wants to get a leg-up on reaching agreement, please don’t hesitate to call to see how I can help get the process started.

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