Editors' pick: Originally published Dec. 1.
Retirement planning isn't easy. You might think, however, that having a spouse or partner to plan with you would make it easier.
But there are plenty of mistakes couples make in their retirement planning, and most of them are related to communication, or the lack thereof.
Stories abound of couples who have been married for years sitting down with a financial planner for the first time, only to find that the husband has a vision of retirement life in the mountains and the wife has a vision of retirement at the beach.
Bryan Hoover, financial planner of Fragasso Financial Advisors in Pittsburgh, says financial planning for married couples requires "a fair amount of communication and transparency." If not, he says, there are a lot of things that can be downright disruptive.
Here are five big mistakes couples can make in retirement planning.
- Only one spouse meeting with the financial planner.
"One of the things I see a lot is only one person communicates with financial planner," says Hoover. "Then it's on them to communicate the advice. Sometimes something is lost. One aspect of creating a plan is to make sure both parties have goals set and you know how much risk you are taking."
"A lot of folks will come into meeting as a representative for their partner," he adds. "I don't feel that works. You will miscommunicate something."
- Buying that dream retirement home immediately.
"That is problematic for a lot of reasons," says Nina O'Neal, partner and investment advisor at Archer Investment management in Raleigh, N.C. "You are increasing expenses in many ways, not just mortgage, but electric bills, cable bills, etc. We see that mistake often. Really, we will advise keeping your current house and maybe downsizing."
- A lack of transparency.
"You shouldn't keep secrets from your husband or wife, especially with regards to finances," says Hoover. "That becomes a ticking time bomb. It's tremendously problematic when there is lack of disclosure when something is causing a big problem. As an advisor, you get caught in that sometimes. If I were talking to newlywed couple I would say put everything on the table - the good and bad parts."
- Failing to plan properly and create a realistic retirement budget.
Joe Heider, at Cirrus Wealth Management in Cleveland, says this is one of the biggest mistakes couples can make. "So many times what people read is that their spending will dramatically decrease in retirement," he says. "In most cases, that's simply not true. Unless they are 90 when they are retire, most couples will tend to spend more money in retirement because now they have 24- 7 to begin doing all the things they dreamed of - travel, hobbies, dining out.
"You have more time to spend money and you have those deferred dreams that you always thought about doing in retirement," he says. "People need to be realistic about their spending in retirement and budget properly. "
- Being unprepared to spend more time together in retirement.
"They may realize they don't want to spend as much time together as they thought," says Ken Moraif, senior advisor at Money Matters. "When you are working you have this separation. When that working spouse is around all the time, they are like this is an invasion of my space. You need to get a hobby. The newly retired spouse doesn't have a plan. He is thinking I will be spending all my time with my wife. The wife is like, 'I don't think so. You need to figure out what you will do.'"
"I would encourage couples to attend some kind of workshop to address and be honest with each other as to what will they do in retirement," says Heider. "Their roles will undoubtedly change. At the very least they will be together 24/7 now, or certainly a great deal more than the past.
Couples need to be honest and forthright with each other on how they will spend their retirement.
"I sat with a client a couple of years ago -- financially they were in great shape," Heider says. "He continued to work, because he wasn't sure what he would do all day long. While he was sitting there, his wife was going to the Mall of America to go shopping for four days. He said this is why I don't want to retire. I'm not interested in spending four days going to Minnesota to go shopping."
Conversely, a guy may think he will golf every day with buddies, whereas his wife may not want to do that.
"There are a slew of things couples need to get on same page emotionally, and what their hopes and dreams are," he says. "If one wants to go to the Mall of America and the other wants to go to Antarctica on a National Geographic cruise, that's a problem. One wants to buy a home in warm weather climate and the other in cold weather. Normally the woman is more focused on staying near grandchildren, and that scenario. Those things need to be discussed at emotional level, what dreams are in retirement. It can lead to a lot of misunderstandings."