You say “tomahto” and I say “tomayto”, but does that really matter? It doesn’t as long as you each realize that you are referring to that reddish orange vegetable but too often couples do not communicate well and that will lead to complications.
Fidelity Investments has released a white paper called “The Couples Retirement Study” which highlights a fact that I often see in own practice; couples on different wave-lengths and unable to communicate to each other their objectives on a number of important issues. Neither I nor the study are referring to newlyweds but to people who have been married for a number of years. Imagine entering your early 60s and thinking about retirement only to realize that your spouse thinks that retirement begins at 75?
The Couples Retirement Study reported that only 41% of the couples surveyed made decisions jointly when it came to investing for retirement. One out of every three couples does not agree on a retirement age or if they will retire. Just fewer than 50% are not sure if they will continue working after they retire and nearly 75% of the respondents were not sure if they completed a detailed income and spending plan. The last item is one for pause; how could you not know whether you completed a detailed plan or not? Only one in six people felt that if they passed away that their spouse would be able to handle the retirement finances.
In my practice, I take steps to make sure that couples do communicate with each other, at least while they are meeting with me. I have each of them complete data questionnaires and then review the answers jointly. When there are items that have material differences, a discussion will take place that will take into account the values of each individual. This is accomplished though my using both humor and anecdotes. While I cannot impose my own values on a client I have no problem in sharing with them how I personally may have handled a similar issue.
There was one client that had a large house, much larger than they needed, but they had not discussed selling it and moving into something more appropriate. The maintenance on their abode was probably 25% of their expenses and that was a drag. The husband, who was in his 70s would not address the issue because it would have caused him to acknowledge that he was more than semi-retired and the wife didn’t address the issue because if it was sold, then they would need to find a new place that would be near each of their children. While I appreciate the consideration shown to the children the reality was that anyplace along the Eastern seaboard would have worked.
I cannot make any of my clients care more about the investment process but I can make sure that they have some understanding about why choices are made and how their portfolio is structured. The fact that they are seeking professional assistance in either the development or management of the portfolio does put them ahead of much of the general population.
Meeting periodically with an investment advisor should also make it easier for a surviving spouse in the event of a premature death – all of the records and documents should be in one place.
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