Are You On the Same Page For Retirement?

Question:  We’re getting ready to retire and examining finances and next steps. What items should we be considering? 

Answer: Congratulations on your upcoming retirement. That you are thinking and talking about this transition before turning the page to the next chapter of your lives is admirable. Many couples embark on this journey without knowing if they agree on when, where, and how they’ll spend their retirement years.

As a CERTIFIED FINANCIAL PLANNER™ Practitioner, the initial questions will focus on identifying the resources you’ve accumulated to fund your current or desired lifestyle. Many couples either don’t know, disagree, or have different ideas on the amount needed and their life expectancies. Adjustments to spending, savings, and visions are easier to make now than later.

There are a few key areas where it’s helpful to be on common ground before the retirement party with the first being when and where you’ll retire. If there are age differences, the time frames and expectations are increasingly important. My husband and I are several years apart so compromise and adjustments create harmony. We continuously talk about how we see our future evolving together.

When, Where, and How

When to retire will depend on cash flow needs, income sources, the configuration and size of your retirement nest egg. Where to retire depends on personal preferences and whether you’ll downsize or move to be close to family, friends, or certain activities. All the answers may be moving targets but having a consensus on these matters is helpful.

If you’re not sure where you’d like to live, try vacationing or visiting locations that are of interest. Making a mistake on where you’ll live can be expensive to fix. Lifestyle is also something you’ll want to discuss as it plays a major role in determining how much you need to have accumulated and will be able to spend. How do you see retirement? Is it a time to travel and do things you couldn’t do while working, or is it a time to relax and enjoy your surroundings? You won’t be able to precisely outline everything but having a general agreement about costs will make the upcoming years more enjoyable.

If necessary, are you both willing to make tradeoffs to increase the chances of having the retirement lifestyle you want? Examining your current lifestyle is a good starting point to see if there are expenses that may disappear while adding others. Here’s a list of the basics to include on the agenda that are the nuts and bolts of financial planning discussions:

Retirement finances

• Monitoring and managing expenses.
• How much you can withdraw from your retirement portfolio annually.
• What your income sources will be.
• How long your money must last (be sure to add a margin of safety).
• What level of risk you can jointly tolerate?
• How much you plan to leave to others or to charity.
• How much you’re going to set aside for emergencies.
• Who’s going to manage the money, and what happens if he or she dies first.

You don’t want to spend your retirement years worrying about money, making it essential to talk about these subjects now. Expect the unexpected, especially as it pertains to healthcare costs. Will you or your spouse need long-term care, and what happens if the market suffers a severe downturn right after you retire? Talking about the “what ifs” may make things easier if the unexpected does occur. Include in this reality check the thought that one of you will likely outlive the other. Creating or modifying your estate planning together will help you enjoy the upcoming years with a plan in place that you’ve both created.

Communication is key, especially when it comes to something this important. Relationships and finances both go through adjustments. The earlier you discuss and negotiate what your expectations are, the less likely there will be disappointments in achieving the satisfying retirement you’ve both worked so hard to achieve. 

Communication is vital, especially when it comes to something as important as retirement. Almost all of us will have to make some tradeoffs and adjustments (as we do throughout our relationships), and it’s important to remember that the earlier you discuss and negotiate what those are going to be, the better your chances of achieving the satisfying retirement you’ve both worked so hard to achieve. Stay focused and plan accordingly. 

The opinions expressed are those of the writer as of March 21, 2022, but not necessarily those of Raymond James and Associates, and subject to change at any time. All investments are subject to risk, including loss. Diversification does not ensure a profit or protect against a loss in declining market. This material is provided for educational purposes only. Past performance is no guarantee of future results. There is no assurance the trends mentioned will continue or that forecasts discussed will be realized. Economic and market conditions are subject to change. Material is provided for informational purposes. Consult your tax professional and financial advisor before making any investment decisions. Holding investments for the long term does not ensure a profitable outcome. The foregoing is not a recommendation to buy or sell any individual security or any combination of securities.

“Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.” This article was provided by Darcie Guerin, CFP®, First Vice President, Investments & Branch Manager of Raymond James & Associates, Inc. Member New York Stock Exchange/SIPC 606 Bald Eagle Dr. Suite 401, Marco Island, FL 34145. She may be reached at (239)389-1041, email darcie.guerin@raymondjames.com Website: www.raymondjames.com/Darcie.