When Couple’s Retirement Spending Isn’t Equal

It happens all the time.   You go through career changes, family changes, changes with income, health, housing, and friends, there are ups and downs along the way, but you are working towards eventual retirement and the goal is simply to be able to retire.   But you arrive on the doorstep of retirement, perhaps you sit down with an advisor and they start asking questions about what it is you want to do in retirement, and you realise you and your spouse are not on the same page.  You realise that while there are things that are important to you together, you each have interests and goals you want to pursue.   Those different interests, hobbies, and goals might cost different amounts.   One spouse may have less expensive ideas of how they will spend their time, while the other spouses’ interests cost significantly more. Financially, it seems like you are no longer working toward the same goal.   Often it is the disparity of spending plans that causes an emotional response of fear.   Fear that because they are going to be spending so much on what they would like to do, that you won’t have enough for the things you would like to do.  Suddenly retirement isn’t something you are looking forward to so much anymore.  Instead, it is a major source of conflict and we feel that the future we had envisioned is under threat.

When feeling threatened, typically the fight or flight reaction sets in.  Unfortunately, when it comes to financial planning, neither of these responses are helpful.   Fighting tends to focus our sights on the actual areas of conflict and blind us to the areas that we might agree on.   Flight usually means burying our heads in the sand hoping the issues go away.   The result of fight or flight many times is the same when it comes to finances and financial planning:   Nothing actually happens.  No planning can happen because you can’t agree what you are planning for, and when planning doesn’t happen, opportunities are missed, costs (like tax) go up, time goes by and suddenly future options are narrowed.

For couples who aren’t on the same page with how they want to spend their money in retirement, try acknowledging that your plans (retirement or otherwise) need to work for both of you and each of you.  As a starting point, if you can agree that your financial plans need to work for you as a household while also allowing each of you to pursue your interests, suddenly both of you are free to discuss what you otherwise may have felt threatened by.   Remember, just like during your pre-retirement years you didn’t necessarily do everything together, you had friends together and friends individually, you may have had interests together and some of your own.   When planning financially for retirement, it is perfectly fine to start by planning what the combined household expenses are and then individually add the expenses of what you want to do.   At this stage, don’t give in to that fear that your retirement happiness is at stake because of your spouses’ spending needs.  Instead, with the combined expenses as your goal, work with your advisor to have a retirement plan created.  Before giving in to fight or flight, wait, and see what the results of your plan are.

With the combined household and individual expenditure estimates, suddenly you have a goal your advisor/financial planner can help you work towards.   Once your advisor has run your initial retirement scenario, you will know if everything is on track and financially you can afford both the together spending and your individual interests.  If the numbers don’t work, now is the time to negotiate.   Maybe there are some together costs that can be reduced, or you revisit your individual spending plans.  If the numbers don’t work, and one partner is looking to spend substantially more than the other, the plan showing things in black and white might open their eyes to the fact that they might have to make some adjustments.  It’s time to talk about what sacrifices might need to be made – not just the overspending one, but working together, you can discuss your options.  Maybe it’s finding ways to reduce spending, or maybe choosing to work a bit longer in order to save more to afford those extras, or maybe it is agreeing that down the road you will sell another asset, like your home, to add more funds for your retirement.  Having done your initial plan, your advisor can help by identifying some of those choices and run scenarios for you to see what might work for you and your spouse.

At least now you know. Not only do you know, but your advisor can both help with identifying your options and identify strategies that might help you together.   Things like how to make your income tax-efficient – a tax-efficient income means less tax expenses and more money for you have both together and as individuals to maintain your lifestyle for your lifetime. Now that you have a plan done, you are in a place where you can start making more informed decisions and again be working towards your common goal.


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