If something were to happen to your spouse, would you know how to find all the important information about your financial accounts? Would all your beneficiary designations be up to date? Do you even agree on who your beneficiaries should be? If your answer is no, you’re not alone. The sad reality is that many married couples don’t communicate very well when it comes to money, and that disconnect includes important topics such as when to retire and how to invest.
Have the Financial Talk Soon – Because Time May Be Shorter than You Think
Last year we discovered this column in the Seattle Times by syndicated columnist Chuck Jaffe, and we felt it was important to bring it back to your attention. Jaffe, who is a heart attack survivor, warns his readers that they need to have “the financial talk” soon, because none of us knows which day will be our last. “Before every long trip I took for decades,” writes Jaffe, “I used to sit my wife down for ‘the talk,’ the never-pleasant topic of ‘Do you know what to do if something happens and I don’t come home?’ As much as she appreciated knowing where to find ways to access all of our investments and records, she never enjoyed those chats.” However, Jaffe adds, “judging from some recent data from Fidelity Investments, couples and families need to have these talks to remove financial stresses and more.”
Jaffe is referring to a Fidelity study that was released in June of 2018. “Many married couples suffer from a failure to communicate,” the Fidelity article says. The study of married couples and finances found that an astonishing 14 percent of spouses (1 in 7) “couldn’t accurately report their spouses’ employment status. More than 4 in 10 couples disagree on when to retire—and more than half aren’t on the same page about how much to save for retirement.” These findings are especially alarming in light of the statistic that more than one-third of couples concerned about debt say that money-related issues represent their number one relationship challenge.
When Planning the Financial Talk, Start with the Basics
Columnist Chuck Jaffe quotes a Fidelity spokesperson who says that “Talks about money always are difficult. But,” she adds “a great place to start them is [with] the basics.” Jaffe says that applies whether you are talking with a spouse or with adult children. “Putting together the information to share with my children was interesting; there was no discussion of amounts of money (which would have been appropriate with a spouse but is not yet an issue for my 20-something daughters), just where to find a list of accounts and passwords, details on how accounts are structured, who are beneficiaries and more.” In other words, Jaffe told his adult kids what they needed to know in case of sudden emergency, without divulging more details than necessary or appropriate. Jaffe points out in his column that his divorce a few years ago has made it especially important to keep his adult children clued in concerning family finances, which could become sticky if left entirely in the hands of an ex-spouse.
“Money talks are best when done without emotion,” Jaffe writes. “During my married days, when my wife grumbled about ‘the talk,’ her friends suggested that she was lucky because they would have been lost in a catastrophic situation. There’s nothing about that talk that is fun, but when I had the heart attack and knew that my family would know where everything is, how they were protected, who to contact and what to do, it gave me great peace of mind. Facing my own mortality, I would not have wanted to be thinking ‘Oh, man, I knew I should have updated my health-care proxy.’” He advises that the essential things a spouse or adult children need to be able to locate include “the last two years of tax returns, marriage and birth certificates, insurance policies, wills and health-care proxies. Accounts, passwords and other data are crucial too, although storing it in a virtual safe might make some sense to avoid potential frauds.”
The Financial Talk: Four Steps to Better Financial Communication
If you’re determined to get on the same financial page with your spouse, the Fidelity article lists four simple places to start. You and your spouse need to:
- List all financial accounts. This includes the obvious – checking, savings, credit cards, 401(k) – and the less obvious, such as retirement accounts from former employers. Find a safe place to maintain a list of account numbers, passwords and PINs so your spouse won’t be lost in the event of your untimely demise.
- Make sure to name and update account beneficiaries. “Having a named beneficiary for retirement and investment accounts and insurance policies is as important as writing a will,” says Fidelity. “Assets in these accounts pass directly to the beneficiaries you’ve designated with your account custodian, trustee, or plan administrator—and generally supersede any instructions in your will.” Updating your beneficiaries is especially important in cases of divorce and remarriage.
- Prepare for the unexpected. This includes preparing a will, a power of attorney and a health care proxy as a bare minimum. If you’d like more assistance with this important subject, please contact our AgingOptions office this week so we can advise you.
- Get your documents organized. Chuck Jaffe’s list, mirrored in the Fidelity article, is a good beginning. Assemble the critical documents in one safe place and make sure you, your spouse and adult kids have access to them when needed.
With the Financial Talk and Retirement Planning, Stop Procrastinating!
Communicating about sensitive topics may be tough, but it’s essential, as any adult knows. For some people, communicating about retirement is one of those “sensitive topics” they keep putting off. If that describes you, please accept our invitation to experience retirement planning with a difference: LifePlanning from AgingOptions. Come and join Rajiv Nagaich for a free, information-packed LifePlanning Seminar where you’ll join men and women just like you exploring the retirement roadmap. Thanks to LifePlanning, retirees can now enter retirement knowing that their finances, housing choices, medical coverage, legal protection and family communication are all interconnected, each component reinforcing the others.
For a complete listing of currently-scheduled LifePlanning Seminars, click here to visit our Live Events page where you can register for the seminar of your choice. Bring your questions and come join Rajiv Nagaich soon – you’ll be very glad you did!