Fraught but necessary: The money conversation when one half of a couple retires
Everywhere we’ve gone this week, my husband Cliff is fielding congratulations from friends and neighbors on his retirement.
He exited his full-time position a week ago. He has earned his retirement, but the term makes me grimace. My career is in full swing, and after more than three decades of marriage, this chapter is going to take some experimenting.
That said, we are simpatico on when to retire. That’s true of most couples — even if few do so at the same time, according to a new report by Ameriprise Financial.
“It’s so important to have a plan for your retirement that covers how you intend to spend your money as well as your time,” Marcy Keckler, senior vice president at Ameriprise, told Yahoo Finance.
I’m genuinely happy for my husband about his decision. But don’t call it retirement.
In reality, he’s not planning on a full-stop to work but rather a return to freelancing as an independent film and television producer and editor, picking and choosing projects he wants to work on. His skills and career give him the ability not to have an age stamp.
The truth, however, is his income will drop precipitously — even with his Social Security benefit, which will start next month now that he’s 70.
As he shifts from saving mode to spending more on travel, for example, I’m already worried about future feelings of resentment over how and what he is spending his retirement savings on. That may never happen, but it’s a niggle.
Read more: Retirement planning: A step-by-step guide
Plan for a retirement paycheck
The truth is that 1 in 4 couples disagree over retirement spending priorities, according to Ameriprise Financial.
“Couples told us they have work to do to get on the same page about how much to spend on children and grandchildren, as well as experiences such as hobbies or travel — two critical priorities for many couples’ retirement plans,” Keckler said.
The data found that nearly half of couples haven’t figured out how they will recreate their paychecks in retirement. And more than a quarter of retired people say they’re spending more than expected.
Money is at the heart of a solid partnership. It's the sauce that has permitted you to create a successful and fun life as a team — from a home to travel escapades to raising a family or even pets, as we have.
Most couples merge their finances after marriage. We are among those who keep a portion of our finances separate.
For us, keeping a few accounts individually has let my husband and me maintain some autonomy, so we haven’t had to ask permission to invest (within parameters) in something we love or sock money into a pastime that creates our work/life balance.
For me, it’s my horse, Caparino Z; for Cliff, it’s tickets to hockey or baseball games and trips to visit his best friends.
But in any relationship, money can trigger anger over accumulated debt and resentment over spending decisions. When one partner retires, that hot button becomes even more likely to flash.
Make money dates
I advise couples to hold regular money conversations to review finances together. Cliff and I have always tried to schedule these every few months, even if they create anxiety ahead of time. Sometimes, they revolve around future dreams or upcoming big-ticket purchases like a new roof.
These chats can dial back the emergence of festering financial problems. Importantly, we review our overall financial picture at least once a year with our financial planner; we rebalance our accounts and look at new investments.
When Cliff started talking about leaving his full-time position last fall, we began the discussion of how he was going to pay himself each month and from which accounts he would set up automatic withdrawals to create the income stream he figured he would need, at least initially.
When one partner retires or heads into semi-retirement, these conversations move into the spotlight.
“Since one income is going away, there needs to be the conversation about cost of living and whether the one income is going to cover everything — or will the partner who's ‘retiring’ need to start tapping into their savings,” Stephanie McCullough, founder and chief executive of Sofia Financial, told Yahoo Finance.
Most of the people nearing retirement that McCullough works with want to be “fulfilled, engaged, and making an impact or interacting with people,” she said. “But often retirement means some income goes away, and the spending goes up because now you have time to do the things that you've been postponing or dreaming of all this time — that’s one of the most fraught parts of the conversation that I have with clients,” she said.
There may be a gap between when a person stops working or steps down a bit and the time that Social Security check kicks in. McCullough works with clients to explore how they are going to make up that difference though part-time or gig and contract jobs potentially.
Start by looking for experienced, credentialed advisers
If you don’t already have a financial planner on your team, you might seek out an adviser who has the Certified Financial Planner designation. Three national groups of financial planners offer searchable databases with contact information: the National Association of Personal Financial Advisors, the Financial Planning Association, and the Certified Financial Planner Board of Standards.
“After the money aspect, it’s the time together, time apart, and the shifting roles,” Dorian Mintzer, a retirement transition coach, told Yahoo Finance. “You need to be respectful on both sides.”
The spouse who is retiring has much more time to play and do things, but he or she needs to develop hobbies if they don’t already have some, Mintzer added. “The panic is when somebody's going to retire, and their work has been their only identity,” she said.
So, part of the work is to develop other interests. It can start with something as simple as, say, a book club, a cycling, hiking or running group, or volunteering. “The key is having more than just feeling like you're so dependent on your partner,” she said.
As for my new “retiree,” we will keep the lines of communication open and, on our July 4 anniversary, once again read the Navajo wedding blessing from our wedding day:
“Now you will feel no rain, for each of you will be shelter to the other. Now you will feel no cold, for each of you will be warmth for the other.”
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist, and the author of 14 books, including "In Control at 50+: How to Succeed in The New World of Work" and "Never Too Old To Get Rich." Follow her on X @kerryhannon.
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