1. Not communicating because it feels like a hassle
As married people, at the end of the day, we need to speak with our partners about money, as well.
Every person’s approach to communication is unique. But I can pretty clearly think back many years to this or that instance where, after long days of talking about money with clients, where I came home to find that my wife needed to talk to me about our personal finances.
That’s a part of marriage.
I quickly embraced the importance of viewing my professional financial conversations separately from my personal financial conversations.
It wasn’t always easy, but it created a great bonding mechanism for my wife and me.
Cut to the chase, even if you’ve saved exceptionally well, the minefield that is talking about money with your significant other never ends.
You, too, might as well embrace it.
I approach these conversations with patience and understanding because, and this is something I’ve seen with hundreds of clients, learning to talk about money - openly and honestly - with your partner is contagious and spills over into every other aspect of your communal life.
2. This is your cash, and that’s mine
This is a tough one.
In a country where both spouses are likely to have careers, and subsequently, have their own retirement accounts, and, by extension, their own retirement account asset allocations, the sense that your money is separate, and belongs to only you, can be a dagger in the heart of both your relationship and your finances.
Now, there are times, such as second or even third marriages where kids are involved, that keeping money separate is probably a good idea. But, unless there is a clear understanding, where, say, when one spouse contributes the maximum to a retirement plan, while the other contributes very little, or when one spouse has a high investment risk tolerance and loves to play the market, while the other prefers a portfolio comprised mostly of Treasury Bonds, these are key differences that can introduce serious personal and financial heartache.
In 2008 and 2009, I met with several couples where one of the partners had their savings wiped out by the market downturn of the Great Recession, while the other partner came through the downturn relatively unscathed.
This placed a lot of stress on those relationships.
If any of the above incongruities apply to you, my advice is to meet with your advisor and find a middle ground that both you and your partner are comfortable with. There is almost always a way to make it work for both parties. You are in a partnership, and when you save and invest, try to remember, you are doing it for the benefit of both.
3. Assuming you will both live forever (or die at the same time)
Mortality is, for most people, the most difficult topic of all.
But, similar to talking about money, open communication, even about death, can create the opportunity for deeper connection and appreciation.
The chances are nearly certain that one partner will live years longer than the other, and that needs to be addressed by planning.
How for instance?
Let’s say there is a big age gap between you and your spouse. That means it’s possible that the older spouse will begin taking distributions from his or her retirement account(s) before the other. For just one consideration, this means that the investment allocation of the older spouse’s savings needs to be adjusted because that money is likely going to be tapped into sooner. If one spouse is five or more years older, all other factors being equal, then the long-term care insurance needs of that spouse need to be considered earlier, as well.
I’ve seen a spouse with declining health need to spend nearly all a couple’s substantial retirement savings to pay for healthcare, which left the surviving spouse alone to struggle to make ends meet.
4. Not coordinating your Social Security filing strategies
Consider this: married couples have 81 different Social Security filing strategies.
But what does that really mean?
It means couples who plan and file at the best time for their unique situation stand to bring in substantially more money from the program over the duration of their retirement than those couples who just robotically apply independently at age 62, or when they reach Full Retirement Age.
For example, there is a type of automatic life insurance for couples within Social Security called a “survivors benefit.” If you make the correct filing decisions, you can both potentially increase your lifetime benefit amount based on the income of the partner who earned the most money over the course of their career.
Again, it all comes down to communication. And that means communication between partners, and communication between the partners and a professional, fiduciary advisor who will help guide your financial decision-making process in a manner that is most beneficial to you.