Are you and your spouse on the same financial page? - Ahwatukee Foothills News: Money

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Are you and your spouse on the same financial page?

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William Hertzog

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Posted: Monday, March 4, 2013 8:34 am

After 24 years of marriage, Joe and Jane often finish each other’s sentences. So imagine how surprised they were when some differing goals emerged during a recent retirement income planning discussion with their financial advisor. As their advisor led the couple through an exercise designed to help them set retirement priorities, they discovered that Joe was eying a particular pocket of savings to enable his early retirement. Jane, on the other hand, viewed that same account as a fund for their children’s college education.

Such discrepancies are common, even for couples who communicate well. “When you’ve lived with someone a long time, you may assume you know what your partner is thinking,” notes Donna Peterson, senior vice president in retail retirement at Wells Fargo. “If you’re not on the same page, you could thwart each other’s objectives without knowing it,” she warns — as in the example of Joe and Jane.

Taking the long view

Uncovering such differences and deciding how to handle them is a critical early step to building a retirement income plan for both partners. During this first stage, your financial advisor will ask each of you key questions, such as when you want to retire, where you’d like to live, and how you ideally would fill your days during retirement.

The answers to those three questions in particular can affect major financial decisions you make as a couple throughout your marriage, so it’s best to start discussing them well ahead of retirement. For example, if you’re in the market for a new home, decisions about how much to spend and how long you’ll stay there may change when viewed through the lens of retirement.

It may make sense to economize on a house you intend to occupy only until your children are through grammar school, or to invest more heavily in a life-long residence. The size of the mortgage can also affect how much you contribute to retirement savings, as well as whether you enter retirement carrying debt.

Buying a home is just one choice into which retirement can factor. “Responsibilities to family, such as paying for education or caring for older relatives, can influence your plans, too,” Peterson said. And just as circumstances may change, so too can your retirement income plan — but it’s important to start with as complete a vision as possible.

Starting the conversation

Surprisingly, Peterson recommends that you and your spouse meet with your financial advisor to discuss your retirement goals in detail.

This discussion may stretch over a few meetings, since there’s a lot of ground to cover. Your advisor will not only help you discover your ideas about retirement, but also begin to educate you about issues that can affect your income plan, such as:

• Health care costs

• Risk tolerance

• Market and economic realities

• Inflation and taxes

“Very few couples have considered all these elements before consulting a professional,” Peterson said.

Your financial advisor can suggest ways to integrate these considerations into your joint retirement income plan. You may walk out of the session with a stronger strategy, as well as a greater understanding of your spouse’s hopes and dreams — knowledge that can make your partnership even stronger.

• This article was written by Wells Fargo Advisors, LLC, for use by William J. Hertzog, CIMA, first vice president of investments for Wells Fargo Advisors, LLC, in Ahwatukee. Reach him at (602) 952-5133 or Wells Fargo Advisors, LLC, member SIPC, is a registered broker-dealer and a separate non-bank affiliate of Wells Fargo & Company. Note: Investment and insurance products are not FDIC insured, not bank guaranteed and may lose value.

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