In a perfect world, both spouses would share the same investment goals and agree on the best way to try to reach them. It doesn’t always work that way, though. You’d be surprised at how often spouses have different visions of what retirement looks like. One wants to spend his retirement days golfing or puttering around in his woodworking shop, and the other wants to spend her time traveling across Europe on a winery tour.
It’s not only important to focus on the funding—you need to determine what you want to do. So many investors spend so much time concentrating on saving as much as they can. Furthermore, because they don’t have a goal in mind, couples complicate their situation by not seeking the advice of a financial adviser. Financial planners often end up playing the role of marriage counselor, working with spouses to compromise on their goals. The conversation of “what do you want to do in retirement” tends to be the last thing on a couple’s mind. Life just gets in the way with their children, dance and soccer practice, careers, promotions, home purchases, etc.
Blindly saving with no defined goal is akin to burying your savings in the back yard and hoping it will pay for your retirement. How much you need to meet your end goals influences your asset allocation between fixed and growth investments, how aggressively you need to invest, what insurance coverages are needed, and how much you need to save.
We believe the conversation of what does retirement look like for you needs to be where you start—not where you end. At Henssler Financial, we base your financial plan around your liquidity needs. We define the end goal and then develop a plan on how to get there. If you want to retire at 60, we then determine how much you’ll need to take you through age 62, the earliest you can receive Social Security benefits; then age 65 when you’ll be eligible for Medicare, then through your life expectancy, generally the wife’s age of 92.
Think about building your retirement like building a custom home. You first define your wish list then add all the bells and whistles. The builder gives you a price. After sticker shock wears off, you start scaling back on the options you chose. Cash flow projections work much the same way. We run different scenarios based on different options for your retirement and project how your assets will last. The different scenarios affect your maximum spending per year, which can help determine what you do.
This type of planning is even more critical for couples who are on their second or third marriage, as each spouse may have specific wishes for the assets they brought into the marriage, specifically when the goal is to leave an inheritance for a child from a previous marriage. In certain circumstances, a couple may choose to manage their retirement accounts separately, rather than as a couple, with each spouse providing for his or her own retirement. In situations like this, estate planning and insurance planning are even more essential.
If you have questions regarding defining what retirement looks like for you and need a plan to get there, the experts at Henssler Financial will be glad to help:
- Experts Request Form
- Email: experts@henssler.com
- Phone: 770-429-9166
This article is for demonstrative and academic purposes and is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
