How To: Talk to Your Spouse About Retirement

DID YOU KNOW?   Only 38% of couples are planning together and 2/3 of couples don’t agree on when they will retire, according to a 2013 study from Hearts and Wallets.  CNN Money published an insightful article this week offering advice on how to discuss retirement with your significant other.

Before jumping into discussion with your spouse, separately sit down and write out a list of all of your own desires for retirement.  This will ensure everything is brought out into the open when you discuss the topic.  Also prepare yourself to overcome the “all-me” attitude.  Plan to listen without interrupting, repeat back responses to make sure you understand and are understood, and avoid criticism.

Once you sit down face-to-face to discuss retirement desires, focus on what will make you both happy.  Ask yourselves, “What are our goals for that stage of our lives, and what will fill our time?”  This will help you figure out what retirement means to both of you, whether it be the time to kick back and relax, spend more time with your families, or travel the world together.

 

Don’t be afraid to openly discuss your concerns, as challenging as this may be.  The toughest topics in this area may be age differences and life expectancy.  Younger partners may want to work for years after their spouse retires, and women should consider the statistic that they tend to live longer and may outlive their husbands.  Repeat your spouse’s points to demonstrate you appreciate their view, and provide your contrasting opinions in a way that feels collaborative. 

Understand the realities of your budget and plan accordingly.  Openly discuss current and future debts and investments.  Some couples may want to sit down with a financial planner who can help serve as an advisor as well as an arbiter to keep emotion out of the discussion.

Focus on the “why” versus the “what” when considering future plans, purchases, and your retirement budget.  Ask yourselves “WHY should we do this?” when considering making special purchases or investments.  Keeping this focus will help push you toward compromises that are in tune with both your heart’s desires, and are within reach of your finances.

Overall, when discussing retirement with your spouse, maintain the emphasis that you are both moving forward toward a happy and fulfilling life together.  Although you may not agree on a few specifics just yet, concentrate on your similarities and keep the focus on your wants and needs as a couple first.

And remember, as with any financial plan, there should always be flexibility.  Nothing is set in stone, so revisit your retirement plans as often as you would your investment portfolios.

To view the full article, click here.

5 Ways to “UP” Your 401(k) Plan

By Olivia Sandham

1. “BUMP UP” your deferral rate.
The average 401(k) deferral rate lingers near 4%, but this doesn’t mean your investment has to.  Increase your deferral to 10% of your paycheck, and your deferral combined with the company match will build an income base that can last in retirement.  Find out if your plan has an auto-escalation feature, which will allow you to automatically raise your deferrals incrementally over time.

2. “CHANGE UP” your fund allocation.
Over the long term, it takes time and skill to choose 401(k) funds successfully.  What seemed like the proper allocation when you were 25 will most likely change when you are 10-15 years older.  If periodically assessing your funds seems time-consuming, a target date fund or asset allocation fund may be more appropriate.

3. “SAVE UP” your account.
There may be a handful of valid reasons for pulling cash from your 401(k), such as a new home or business purchase, or for an emergency situation.  But you could be charged a 10% tax penalty on early distributions taken before you are 59½, and you may have to repay the loan within 60 days.  Instead, consider your 401(k) strictly as a retirement savings account: money goes in and stays in until retirement.  If you do have to take a loan, repay it as soon as possible so your money can get back to work for you in the market.

4. “FOLLOW UP” on your investments.
Make a plan for your 401(k) and keep an eye on it to ensure you are still on track to meet your savings goals.  A 401(k) is a long-term investment, which means there will be highs and lows in performance, so you should periodically check to make sure you’re on track.  Review and keep your quarterly statements, but don’t preoccupy yourself with looking at your account every day.  An appropriate time to reevaluate your 401(k) plan on an annual basis would be during re-enrollment so you can make any necessary adjustments.

5. “LINE UP” your future budget.
Once you’ve retired, you will rely on your 401(k) savings as a stream of income.  Before reaching too near to that point, get an idea of what your future expenses will be.  Understanding how your lifestyle will be during retirement will help you make sure your 401(k) plan will be able to cover these costs.

Introverts Versus Extroverts in the Investment World

Which makes a better investor: an introvert or an extrovery?  Yahoo Finance reported an interesting article on this topic.  A clinical psychologist, Laurie Helodge, explained how extroverts are attracted to investing for the thrill they get from it. Thrill-loving can be an indicator of big risk taking.

Warren Buffet is a very good example of an introverted investor. He has taken risks but those risks were taken after much thought and research. An introvert will tend to gather more research before taking a risk. Introverts are reluctant to spontaneous decisions.

Investing behaviors can be tracked all the way back to our genes. Dopamine is what causes extroverts to get a high from investing by focusing on high achievements. Saratonin is what causes introverts to calm down. Both extroverts and introverts have their share of downsides. An extrovert might act too quickly, whereas an introvert might be overly cautious and miss a great opportunity in relying on more research.

This research is important because it reminds both introverts and extroverts to put themselves in an environment that they can perform at their best. For extroverts, an environment with lots of stimulation and background noise (even if it is just music). For introverts, a low-stimulated and quiet space. "Extroverts can learn when it is time to pull back and gather more information," advises Helgoe. "And introverts can learn when it is time to trust their analysis and push forward."

To read the full article, click here.

Could I flip a house?

If you are considering flipping a house, whether you enjoy working on houses, want to earn profit, or any other reason, this article offers insightful advice: How House Flipping Works.