Retirement planning is an important aspect of our lives. As good stewards and responsible members of a family we must include retirement within our overall family financial planning. If you are married, you naturally should do this planning together with your spouse.
One of the areas that needs to be address in any financial planning is the behavior of the family members towards money. This most be handled with care to avoid unnecessary conflicts. In the end the family goal should be towards the preservation of wealth and being good stewards of the wealth. After all, what is the point of saving and investing really hard if your partner is a secret spendthrift running up huge debts. Ultimately they’re going to drag your finances down to their level.
You need to sit down with your loved ones and talk about what you’d like retirement to hold. Perhaps your ideas about retirement differ. Your spouse may want nothing more than to give up work while you want to work until you drop because you just love it. Whatever the scenario may be, it helps talking things through.
Here’s an action plan for how to effectively join forces with your spouse to drive for that retiring wealthy finishing post:
ߜ Establish when you both want to stop work. One of you may be younger and therefore have longer to go to build up a full state pension entitlement. If there is an age gap, perhaps the older person in the marriage can carry on working for a little while to build up a big enough cash pot to allow the younger person to retire earlier than would otherwise be the case.
ߜ Decide between you how much you need. You need money to take care of life’s basics plus cover emergencies. You may have very different ideas of how much money you both need in old age.
* Warning: Don’t underestimate your financial needs. Certain outgoings cease after your retirement but you have more free time on your hands. Filling this costs money: You may want to travel several months of the year, take up golf, dine at fancy restaurants twice a month, serve on a ministry at church or planned giving to a special church project. A retirement spent watching television all day is no fun: Plan carefully so that you’ve got enough cash to enjoy yourself.
ߜ Examine how much you’re on course to receive. Do not wait until retirement to determine how much to expect over your retirement. This may not be a pleasant surprise. Now is the time to meet with your financial advisors to estimate your retirement funds and make the necessary corrections to meet your retirement goals.
ߜ Calculate how much you need to reach your joint goals. In order to buy retirement income for you both to live on – normally through an annuity – you need a big pot of cash.
* Tip: One way to protect your retirement savings and extend it through your expected life after retirement is through the purchase of an annuity. The concept behind an annuity is very simple. You hand over your savings to an insurance company and it pays you an income until your death. The amount of income you get depends on how much money you hand over and the annuity rate when you purchase the annuity.
ߜ Agree on what you’re willing to sacrifice to reach your dreams. It stands to reason that in order to build up a big enough cash pot to enjoy a comfortable retirement you have to save, invest, and work really hard. You can’t do any of this without making sacrifices whether that is curbing your spending, paying a portion of your income into a pension or simply setting time aside to monitor your savings and investments.
ߜ Determine what you want to leave behind for loved ones. If you have children it’s likely you’d like them to benefit financially on your death. If that’s the case you want to ensure you’ve enough money to take care of your combined needs in retirement and leave a tidy legacy for your children, perhaps taking out a life insurance policy to benefit them as well.
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