Couples: Are you on the same page in financial planning?

Whether you're a newlywed or are in a long‐term committed relationship, most couples recognize communication and shared goals are key to happiness and harmony. Many couples discuss lifestyle goals such as where to live and work; whether to have children and if so, how many; where to vacation or spend holidays; and more.

Money and financial goals are more difficult to discuss and are often ignored. And it's not just about how much you spend. Sharing financial goals and plans is critical to achieving financial security and peace of mind, especially as you approach retirement. Being in sync on finances may also make for a stronger relationship. A recent survey revealed that 90% of happy couples discuss finances once a month, vs. 68% of unhappy couples. And 36% argue about money at least monthly. While many couples believe they are highly skilled in communicating with each other, it's not always the case when it comes to investing and planning for retirement.

A 2017 Survey revealed a number of disconnects among couples in financial basics, such as knowing how much their spouse earns and how much they should save for retirement. The study looked at both communication and knowledge of finances between couples. The online survey was conducted among couples at least 22 years old in a married or long‐term committed relationship and living with their respective partner, with minimum household incomes of $75,000 or minimum investible assets of $100,000.

Among the Findings

Align Your Goals

Here are some guidelines to help you and your spouse or partner begin or refine your planning, especially as you approach retirement.

Start the Conversation

Talk about the big picture so you can assess whether you both want the same things and how you might be able to adjust if you don't. This first step is absolutely critical—define your dreams, discuss priorities and set the table. Some advisors suggest couples write a wealth mission statement together, putting into words how they would like to manage their wealth over time.

Ask Questions, Identify Differences or Concerns

Each spouse should list questions or concerns; then you should discuss them together. For example, one spouse might be a saver and the other a spender; one might be more concerned about debt than the other. Even if both spouses are savers, their priorities might vary significantly. This exercise also can reveal areas of worry that either or both spouses were not aware of and will be helpful as you design or adjust your financial plan.

Determine Your Risk Tolerance

Financial advisors commonly talk with clients to assess their tolerance for risk. Some couples may want to have each spouse meet individually with the advisor so he or she can conduct separate risk assessments. Then, your advisor can get a true feel for each individual's comfort level without influence from a spouse. Surveys often reveal significant gender differences in risk tolerance, with men generally less risk‐averse than women. Studies show women tend to have lower risk tolerance than men.

Identify Important Goals and Priorities

How long do each of you plan to work? What type of lifestyle in retirement appeals to you? Do you want to keep your primary home or downsize? Will you stay put or move to a new city? Will you fund your children's education, and if so, will that extend through graduate school? Do you have philanthropic intentions? Establishing mutual goals will make your planning smoother, especially if the economy experiences a downturn and you need to adjust. Listen carefully and pay attention to details. Perhaps one spouse plans to retire early and the other wishes to keep working, which can lead to resentment if you are not in agreement. One spouse may wish to buy a vacation home and the other may prefer to downsize and travel in retirement.

One Couple, Two Portfolios

It's very likely that each spouse will have his or her own 401(k) plan, making it critical to coordinate asset allocation across those separate accounts. As you leave work and proceed through retirement, you may consider simplifying your finances and consolidating accounts where possible. Simplifying your portfolio will also make it easier if one spouse is or becomes unable to participate in planning.

Understand Your Options

Each spouse should have a thorough understanding of his or her options concerning retirement income and benefits with an eye on what is best for the couple. For example, post‐retirement healthcare benefits will have a significant impact on your monthly and annual costs, as will options within any pension plan, military or other employer‐sponsored defined benefit plans available to either spouse. When to claim Social Security benefits is a major decision, but claiming strategies for married couples can be complicated. Although most individuals can claim Social Security benefits at age 62, you can increase your eventual monthly benefit by as much as 8 percent per year by deferring until you are older. Once you have evaluated all of the choices available to you in benefits and income, you can determine the best course for your mutual situation.

Test Your Plan

Give serious thought to unexpected occurrences and worst case scenarios to help determine whether you have the financial means to cope and still maintain your desired lifestyle. For example, consider whether you are prepared to handle a serious illness, unexpected medical bills and the death of your spouse or moving out of your home because of a natural disaster or because you need assisted living or nursing care.

Plan Your Estate

Once you and your spouse have thoroughly discussed your financial situation and taken steps to align your priorities and goals, you should create an estate plan (if you haven't already). Having an estate plan in place helps ensure your finances will be in order for your family, and assures you and your spouse's affairs will be handled as you wish. An estate plan may also allow you to avoid probate court and make provisions to care for and protect children and other beneficiaries.

Keep Each Other Informed

While one person is likely to handle the paperwork and make changes, make time to review accounts, asset allocations and results together. Many couples do this quarterly, but some may do it annually. Consider changes that may be needed going forward to meet your shared goals. The person who manages paperwork needs to make sure their partner has access to critical information, such as account numbers and passwords and where account information is stored. Most would agree open and transparent communication helps in all aspects of a successful partnership. Committing time to discussing money can help you make sure you and your spouse's goals are aligned, and you are making choices that support your mutual goals.