Do you know how much money your partner makes? According to the newly released Fidelity Investments 2015 Couples Retirement Study, which surveyed 1,051 couples, 43 percent of people couldn’t accurately say how much money their partner earns, and 1 in 10 guessed incorrectly by $25,000 or more. Still, around 3 in 4 couples say they believe they communicate well about money issues.
One factor at play might be our increasingly project-based economy, which means incomes can vary depending on the month. “Grandparents might have worked for a company for a long time and had a salary and a pension, but today’s workforce is much more mobile and variable in income,” says John Sweeney, executive vice president of retirement and investing strategies at Fidelity.
Sweeney says that talking about income and other financial issues is important for couples to do in order to plan effectively for retirement. “For current spending, or thinking about longer term goals like retirement or saving for a home or college, understanding what you make and how much to put away is a critical part of that planning conversation,” Sweeney adds.
That conversation can take different forms depending on your life stage. Couples who are dating can make sure they’re financially compatible and reduce potential areas for disagreement by talking through spending and saving plans early. Couples approaching retirement should discuss how they will generate income in retirement, spend their money and use their portfolios to support their lifestyle. “If you have a plan, then you’ll end up with a more successful retirement,” Sweeney says.
More mature couples who are marrying after significant experience managing their own finances and obligations might opt to explicitly divide up responsibilities and accounts. “The question is which expenses will be shared and which expenses are best covered by which party. It will be very individual,” Sweeney adds.
In addition to salary, the survey identified other areas where couples tended to have mismatched views. Around 36 percent of couples disagreed on the size of their investable assets and half disagreed about the amount of money they need to save to maintain their current lifestyle after retirement. Baby boomers, the group currently nearing retirement or already in it, were the most likely to disagree with their partners on the subject.
Individually, some survey respondents were also relatively clueless about their financial situations: Sixty percent of couples and almost half of baby boomers didn’t know how much their Social Security benefit will be. (Fidelity points out that anyone can look up the information through the Social Security website.)
Respondents also reported high levels of concern about retirement, including about rising costs, health care expenses and whether they would outlive their savings. Fidelity found that couples who took the time to plan for retirement were more likely to feel confident that about managing their retirement when necessary.
Here are more tips from Sweeney on how both you and your partner can get on the same page about retirement planning:
1. Talk about your salaries — and your spending.
“If you have a good sense of what you make and there’s alignment on what you’re bringing home, you have transparency and trust. The second most important part is how you’re spending your money,” Sweeney says. “If you don’t have a good handle on that, it’s harder to get to a higher level of saving and investment. Fidelity recommends putting away at least 15 percent of current income to prepare for retirement.
2. Speak up.
The survey found that women are feeling more confident when it comes to engaging in these financial discussions, which Sweeney says is a good thing, so the goals of both partners are represented in planning discussions.
3. Plan more and worry less.
Developing a retirement plan, which includes mapping out saving and spending goals, goes a long way toward reducing worry over how to finance retirement, Sweeney says. “Those with a plan feel more confident in their ability to assume full financial responsibility should their spouse no longer be here or no longer be able to support the family,” he says. Couples should discuss their big goals and when they’d like to achieve them, as well as emergency fund savings and what a fruitful retirement looks like for both parties.
4. Talk with your grown kids.
For couples with children who are now young adults, Sweeney urges open conversations about finances. “It’s important to have this conversation across generations. Think about how to share information with your recently graduating college kids: ‘Here’s what we did, here’s what we wish we’d done.’ You have a great deal of influence over your children even when they’re mature adults,” he says.
Likewise, adult children can ask their parents for financial advice. “Parents want to see their children succeed,” he says. That desire can lead to some useful conversations.
More from U.S. News
10 Ways to Save While Gardening
10 Money Tips for Family Caregivers
How to Talk About Retirement With Your Partner originally appeared on usnews.com
