The 7 Retirement Moves Couples in their 50s Should Make Now
For when retirement isn't a distant dream anymore.
Many people head toward retirement as part of a couple. But that doesn’t mean that spouses are working together as a team.
Only one-third of couples have even discussed retirement planning, according to a 2016 study by consultants Hearts & Wallets. Asked how much money they think they will need for retirement, 47% of couples disagree, Financial Horizons Group recently found. And men and women often have different interests in later life, with far more men than women engaging in sports and outdoor activities, and far more women than men getting together with friends and family, according to new TIAA research.
Getting on the same page about saving and planning for post-career life is critical for couples in their 50s, for whom retirement is suddenly not that far away. “Eighty percent of reaching your goal is defining what your goal is and having a plan for speed bumps that could derail you,”says Bernie Petkau, CEO of Advisor & Co. Wealth Management in Saskatoon.
Your fifties may provide an opportunity to turbocharge savings, as you’ve advanced in your careers and put the biggest money obligations to your children behind you. Or your finances may be pinched by new challenges, like a career setback or obligations to aging parents. If you are remarried, you may be recovering from the costs associated with your divorce. A lot is at stake.
Here are seven smart moves you can make at this stage of life that will help you transition comfortably to the next one.
Put a price tag on retirement
You may still be talking about whether you’ll stay right where you are or move to that beachfront condo you’ve been eyeing, but it’s time to get serious about some numbers. Advisor & Co has a tool that can help you rough out a retirement budget.
Plug those estimated expenses into an email to Advisor & Co, info required, such as:
-Current age
-Age you wish to retire
-How many years you want your money to last
-Are you going to leave any cash to charity or Children?
-Expected monthly cash flow needs during retirement in todays dollars, -Current savings both RRSP / TFSA plans and LIRA pension plans you may have left at an older career
-The current rate of return your getting now,
A report will be send back usually within 24 hours of where you are, where you want to be, where you are on track and where you need to tighten up. Sample report here,
Play catch-up
When kids leave home, empty-nesters typically increase their RRSP saving by less than 1% of pay, a recent Toronto College study found. That may not be enough to get you where you want to go. So before you find new ways to use those dollars, bump up your saving by the amount you had been spending on tuition and room and board. The rules on catch-up contributions to retirement accounts can help.
Beth Weimer, 57, says neither she nor husband Russ, 56, “really planned well during our first marriages.” When they got together in their mid-forties, they made preparing for retirement a priority. Russ worked out a plan that could enable them to retire before age 60, assuming they set aside about 20% of their pay each year. “You have to have a shared vision,” says Beth.
Simplify and share
By now, you each may have accumulated multiple retirement and investment accounts, and despite your best intentions, one of you may be mostly out of the loop on financial matters. Twenty-four percent of partners worry that their mates wouldn’t be able to manage finances without them, and 18% say their mates are completely unengaged, according to a Hearts & Wallets survey Meanwhile, money skills peak around age 53, research shows, and they typically deteriorate as you age.
Do your spouse and your future self a favour by consolidating your money into fewer accounts at fewer firms. That will also make it easier to look at your overall mix of stocks, bonds, and other investments and decide—together—if it’s appropriate.
To see if your investment risk tolerance matches your spouse’s, you can contact Advisor & Co. for a tool. A typical allocation for a couple in their fifties might be 65% to 75% stocks and 25% to 35% bonds, unless your have products with a guarantee. "Like Guaranteed Investment Funds, higher rates of return, and these lock in market gains eliminating losses."
