Financial Mistakes Couples Can Avoid in Retirement

It’s important to figure out a game plan around your financial affairs if you’re married or have a life partner. While everyone’s situation is going to be a little bit different, there are a few things to consider when developing your financial plan. Read on for some of the most common financial mistakes that you can avoid in retirement.

Be Aware of Your Pension and Social Security Claiming Options

If you have a pension plan available, you might have a several different claiming options available to you. If you’re one of the fortunate few with a pension, that might be an area where you can delay social security and build that social security income for your future and use it as a hedge against longevity.

Social security as it is currently set up, still has costs of living adjustments. Therefore, it could potentially mean that by waiting to collect your social security, you’ll have a larger check and inflationary adjustment. Of course, we’re going to see how those rules play out over the next few years.

Conduct a Thorough Review of Your Pension Benefits Package

Usually when you have a pension plan available to you, you will receive a benefits package through mail or email. It’s important to consider a review with a financial planner so that they can walk you though the pros and cons of your claiming options. There are some important questions that need to be addressed during that conversation, “Do I want to take care of a spouse? Do I have longevity?” just to name a few.  You may also get some added insight around taxes and other topics that may not come as easy to you as someone who professionally looks at this often. Finally in some situations, you can even collect that lump sum if you don’t have longevity in your family or if you feel investing this amount may be beneficial vs. taking as an income stream. Everyone’s situation is a little bit different which is why it’s important to have a plan.

Create a Lifestyle Plan

We go back to the old saying that “communication is key.” It’s important to have a conversation with your spouse or partner about what you would like to see happen as part of your lifestyle plan. One person may want to travel more than the other. There may be a major purchase coming down the pipeline. Or you wish to continue being charitable collectively.

Some may have already had that conversation and others have not. As a financial planner and fiduciary at Financial Dynamics & Associates, Inc., we’ll sit down with you and start that conversation. That conversation can start on general terms but can lead into reasonable action steps to have you feeling accomplished. It’s important to have that information so that you can create a lifestyle plan that works best for both of you. Money is simply a tool that will allow you to extrapolate whatever you want to do in retirement.

Take the Time to Coordinate Your Financial Affairs

As you’re preparing for retirement, you might find that you and your partner have different types of accounts. For example, a couple that has a 401(k) and an IRA are required to take a minimum distribution when they reach the age of 72. They’re going to have separate required minimum distributions. If this sounds familiar, you may be asking yourself, “Can we roll those together into an IRA to help manage those required minimum distributions?” As a financial planner, it’s our job to help manage the overall financial plan moving forward and bring some clarity and simplicity to the picture.

Managing Risk That’s Consistent with Both Parties

It’s essential to have a conversation with your spouse or partner about your risk tolerance. For some, one spouse might be more aggressive with their investments, the other more conservative, or they’re a combination of both.

Consider asking yourself the question, “Do we really need to take on more risk to accomplish our goals?” A lot of times, that satisfies the question right there. But risk tolerance is one of those conversations worth having with your financial planner and should be discussed on a yearly basis as you make updates to your financial plan.

What we found here at Financial Dynamics & Associates, Inc. in Midlothian, Virginia, is that as our clients get deeper and deeper into retirement, they tend to become more conservative with their investments. They’ve worked hard for their money and would like to hang onto it through retirement, maybe even pass that along to family. Whatever the case may be, we can make those small plan adjustments for you along the way.

If you’re interested in having a conversation about your financial assets and retirement goals, consider talking with one of our financial planners at Financial Dynamics & Associates, Inc. As a firm focused on creating customized retirement plans in the Midlothian and Richmond, Virginia metro area, we may be able to help advise you based on your overall financial situation.


This information is not intended as a solicitation or an offer to buy or sell any security or investment product. Advisory services offered through J.W. Cole Advisors, Inc. (JWCA). Financial Dynamics & Associates, Inc. and JWCA are unaffiliated entities.