Issues you should decide as a couple for your retirement

One of the most important things a couple can do before retirement is get in sync with their finances. If a couple is out of sync, the retirement It will aggravate that division. The big issues are not discussed until after the retirement, when both spouses can clearly see the mismatch. As a result, these couples find it difficult to agree on even the most basic financial matters.

What is it like to be in tune with your finances? In my experience, it involves creating a financial plan (and understanding its various levers), developing a vision for retiree life, and setting clear expectations with one another. Let's look at each piece in more detail.

Know the levers of your financial plan

Every couple needs a financial plan for their retirement, and it is important that both spouses understand the specific levers of that plan. One lever is income: Social Security, a pension or 401(k) plan, rental houses, etc. Another lever is spending (more on that below).

Another lever is how the money is being invested and what the expected rate of return will be. A 2% rate of return will be very different to the outcome of the plan than an 8% rate of return. The risk tolerance of each person is linked to the discussion. If you're okay with more risk in your portfolio while your spouse prefers to play it safe, an advisor can help you find that middle ground.

Another relevant lever is life expectancy for both you and your spouse. Our days aren't guaranteed, obviously, but if you expect to live to be 90, your money should last longer.

Read More: Families must pay the debt of a deceased? we answer

Let us now return to what could be called the most important lever for a financial plan: spending. What I often see is that one spouse is in charge of paying the bills, while the other is in charge of the investments. Operating in silos is not recommended as the retirement. It is much better for both spouses to know what the other is doing in terms of their resources. If your spouse were to pass away, the last thing you want to do in the middle of your grief is find out what bills need to be paid, when, or where your money has been invested.

The second part of getting in sync with your spending is knowing what you spend each month. It can be burdensome to track every penny you spend, but without that awareness of your spending, you can't effectively deploy your capital across the board. retirement.

Decide what retirement looks like

Knowing the levers of your financial plan to be in sync with your finances is a job that must be done with a purpose. What are you and your spouse retiring to? Do not leave this until you are on the threshold of retirement. Two years early (or even sooner; five years would be ideal), it's time to have a conversation about what retirement life will be like.