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How to Plan for Retirement as a Couple

Tips to help married couples plan for retirement together


Newly married couples often have a lot of financial planning to do: starter house, kids, a vacation fund, dream house, a college fund. It's easy to overlook or ignore planning for your shared retirement. Don't let this happen. The golden years may ultimately be the best of your marriage, if you understand each future other's goals, needs and expectations. Here's are six tips for planning for retirement as a couple.

1. Discuss Your Big-Picture Goals

Sit down with your spouse and share with each other your ideal retirement. One of you may envision retiring at 45 while the other is happy to work forever, you may dream of a cabin in the country while your spouse pictures spending your golden years in a motor home. The sooner you are aware of the other's goal, the more time you have to work toward a compromise and a shared ideal.

2. Save for Retirement Together

Each of you is ultimately responsible for your own retirement, but just as you make today's financial decisions together you should save for retirement together. Is your spouse participating in a 401(k)? If not, could you afford to add a bit more pre-tax income to your own plan to meet your mutual goals? If one spouse is not working outside the home, you may want to consider a Spousal IRA, which allows you to put aside funds in a tax-deferred investment account for the benefit of an unemployed spouse.

3. Get Familiar With Each Other's Financial Statements

Reading 401(k) and IRA statements together will help give you both a sense of where all of the accounts live and what is in them but you should also pay close attention to each other's investments. A balanced allocation of assets helps to minimize dramatic shifts in your retirement plan. If one of you is taking on too much risk by investing most of your savings in company stock, or not taking on enough risk and is invested fully in bonds, it will impact the other's retirement plan.

4. Consider Your Shared Income Needs

Depending on your stage in life, you may be able to gauge how much you will need in retirement. Perhaps you are convinced you could make a budget work with half of your current income, but your spouse wants a lifestyle that will require the same level of income you earn today. Aligning these expectations will help you build a more realistic plan.

5. Check Your Beneficiaries

Remember when you first started your 401(k)? You had to include the name of one or more beneficiaries, the people who will receive the money if you should pass on. Make sure this information has been updated since is as up-to-date as possible, and reevaluate in the wake of any major life event, such as a marriage, the birth of a child, a divorce or a family death. Changing your beneficiaries can be done easily by contacting your brokerage firm if you have an IRA or the human resources representative that administers your company's 401(k) plan.

6. Understand Retirement and Divorce

If you are happily married, you should not discuss divorce in relation to your retirement plan. But if the marriage is coming to an end, it will likely affect your retirement savings and long-term plan. The separation of marital assets can extend to retirement plans, involving something called a qualified domestic relations order (QDRO) to divvy the money without early withdrawal penalties. Divorced spouses may also qualify for Social Security benefits after the death of a spouse.
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