Avoid These Retirement Planning Mistakes With Your Spouse

April 25, 2022

Retirement planning mistakes can occur if couples do not fully understand the decisions they make in the planning process. For many people, planning for retirement can be mystifying and can lead to many challenges among couples. Thus, understanding the stipulations of different types of retirement accounts and preparing for tax liability are two issues that cause people to make retirement planning mistakes. Retirement planning with your spouse can be even more complex as you calculate joint contributions. Developing a retirement strategy is essential. Next, you should also be on the lookout for common pitfalls that can result in costly missteps. Consider the following four mistakes that often occur when couples plan for retirement together. 

Rigidly Dividing Responsibility 

Too often, couples planning for retirement together will rigidly separate their responsibilities. You may agree and insist upon a monthly contribution. For example, it would split evenly between both parties. It often stems from each person’s mindset. Often, people have the attitude about managing their money separately. With retirement, it should never be a matter of managing separate bank accounts. You must manage your money together. It is the best way to ensure you meet your goals and accomplish them in a unified manner. 

Opting for a Single-Life or Lump Sum Pension 

Many couples will depend on one or both partners’ pensions to fund their retirement. When you are collecting on this pension, though, it’s essential to choose the best distribution option. Too many couples opt for a lump sum, but this often increases the likelihood that you’ll run out of funds. Some choose a single-life option, but this is also detrimental because it can halt payments to a spouse if the pension owner passes away. 

Not Considering Life Differences Planning for retirement often comes with sensitive conversations, and nobody wants to discuss issues like declining health. Failure to do so is a significant problem when planning retirement, though. If one partner is significantly older than the other or in worse health, you must be honest about these factors and plan for the possibility that one of you may pass away before the other. You must ensure that your spouse will have something in the event of your death. 

Ignoring Disparities in Financial Knowledge 

Health disparities aren’t the only issue of concern amongst couples. In many cases, one partner may have more financial knowledge or experience than the other, posing a significant problem. There’s nothing wrong with one spouse handling joint finances, but when you’re planning for retirement, both parties must be on equal footing to make informed decisions about their financial future. If there is a disparity in this area, the more knowledgeable spouse should take the time to inform and guide the other.

About 1891 Financial Life

At 1891 Financial Life we don’t just sell policies, we offer possibilities. We pride ourselves on giving back to the communities that we serve by providing quality and comprehensive insurance solutions. We are a not-for-profit life insurance Society, which means the sales from these financial service products help fund member benefits along with social, educational, and volunteer programs designed to respond to community needs. Our portfolio is extensive, ranging from various life insurance policies to our annuities to support your financial needs no matter what stage of life you’re in.