Reader's Question: My spouse handles our finances, how can I start helping?

Question:

My spouse handles the finances, what should we do to ensure I can handle them too?
-Robin

Answer:

Robin,

I often encounter couples where one spouse is more involved in financial decision making than the other. Even if finances aren’t your forte, it’s so important that both parties participate in financial planning.

Married couples at age 65 today will have a 50% chance that at least one of them will live beyond 90.1 More commonly, it’s the wife who outlives her husband.

I’ve seen countless situations in which recently widowed spouses are uncertain of their finances, simply because they had not discussed it with their partners.

If one of you enjoys making investment decisions more than the other, be sure the two of you have a plan in place for how to take over if the lead decision-maker may no longer be able to do so.

The key is good communication.

1) Talk about it

According to a 2016 study2 on couples between the ages of 25 to 70, 73% admitted to having different financial management styles than their partners.

Such differences can make big impacts on the future. Among the greatest mistakes couples can make is failing to discuss their expectations. Many people have very different ideas about what retirement looks like.

In a 2015 Fidelity Investments Retirement Study3, 48% of married couples had “no idea” how much money they would need to maintain their lifestyles in retirement and 47% disagreed on what they would need.

2) Get on the same page

Even if retirement may seem like some distant time in the future or you’re already enjoying the leisure life, it’s never too early to start the conversation with your spouse:

  • Ask questions:  How might your financial priorities differ? Your spending styles?
  • Identify common goals:  How long do you plan to work? What type of lifestyle do you want in retirement? Do you plan to fund your children or grandchildren’s education? Do you have philanthropic goals?
  • Consider your future healthcare needs:  Do you have a plan in place to cover health emergencies or long-term care? Do you have health care proxies in place?
  • Keep each other in the loop:  How have your thoughts and priorities changed?

3) Even if you plan apart, plan together

Very often one spouse will plan to retire sooner than the other one, and start drawing down on benefits. Before that happens, look before you leap.

Retirement timing of one spouse first, or both spouses simultaneously can affect your overall household quite differently—regarding income as well as the emotional adjustment to changes in lifestyle.

Which one of you is the higher earner? Does it pay to delay retirement? How might a shift in daily activity affect each partner differently?

It is in your best financial interest to investigate these issues, so that you can work together during these financial and psychological transitions.

4) Work with someone you trust

Talking about money is not always easy. In fact, arguments over finances are one of the leading causes of couples breaking up.4 That’s why it’s good to take the time to find an advisor you can trust as a couple in the event something should happen to one of you before the other.

Whether you and your spouse take an equal role in managing your investments, or one of you takes the lead in financial matters, both of you need to feel confident and secure that your needs and goals are aligned for a financially healthy, happy, and long retirement.

Conclusion

I’ve met couples where the spouses had different styles and different approaches to spending, saving, and investing. I’ve also seen partners in a couple who maintain some degree of autonomous money management.

That’s why at Hanson McClain, we encourage open lines of communication. We work together with you to keep these goals in mind:

  • Retire confidently
  • Invest wisely
  • Minimize debt
  • Mindful budgeting
  • Cover financial emergencies

Regardless of any differences, money matters need neither be contentious nor terrifying—especially when it comes to retirement. That’s why it’s so important for both spouses to participate in financial planning.

Consider talking about it with a trusted advisor today.

 

 

  1. https://www.ssa.gov/pubs/EN-05-10147.pdf
  2. http://www.moneyhabitudes.com/financial-statistics
  3. https://www.fidelity.com/about-fidelity/individual-investing/fidelity-couples-study
  4. http://www.k-state.edu/media/newsreleases/jul13/predictingdivorce71113.html

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