The Journey: 2nd Or 3rd Time Around –– Money Matters

By Janet Kidd Stewart
Tribune News Service

WWR Article Summary (tl;dr) When it comes to money matters, communication is KEY! This article explores ways to better communicate your financial goals to your partner and loved ones.

Tribune News Service

If gray divorce doesn’t rain down enough financial stress on a retirement plan, a second (or third) marriage or domestic partnership certainly will. What to do?

Heading into a new committed relationship means both partners need to take stock of their retirement plans and legal documents, having detailed conversations not only about how to split monthly expenses, but how to plan for future health care needs, how heirs will factor into the estate and how aggressively they’ll need to invest to stay ahead of inflation.

In a just-released book, “How Much Can I Spend in Retirement?”, veteran retirement income researcher Wade Pfau, a professor at the American College of Financial Services, cautions against relying too heavily on the assumption that a household’s spending will go down as old age approaches.

Citing a J.P. Morgan Asset Management study of 613,000 households headed by people 55 and older that found big differences in spending patterns, Pfau urges retirees to consider whether they may be heading for a high-spending retirement.

In the study, 39 percent of households were categorized as relatively frugal, while 29 percent spent pretty freely on pricey homes, 5 percent traveled extensively, 4 percent had high health care bills and the rest had unique spending preferences that couldn’t be lumped into a category.

Think about it: If you spent decades never daring to touch the minibar while traveling for work, how will it feel to check into a hotel in retirement and have your new partner ordering room service and a movie? If your 401k is flush enough to not need too much stock exposure, how will it feel to increase the volatility to make up for a partner’s skimpier account?

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