How to Plan for Retirement As a Couple
Talk about your long-term goals., Project your future income at retirement., Estimate your retirement expenses., Calculate your income/savings gap., Consider your longevity., Project the required savings to fulfill retirement goals., Make clear who...
Step-by-Step Guide
-
Step 1: Talk about your long-term goals.
As you and your partner begin planning for retirement, it is important that you clearly communicate what you want out of it.
Many couples fail to talk about retirement with their partner, which can lead to incompatible plans and a failure to save properly.Talk with your partner about your retirement savings and ask yourselves what you want to do once you have retired.
Answer these questions with your partner:
At what age do you want to retire Where do you want to live after retirement? What do you want to do after retirement Do you want to leave an estate for others? Do you intend to travel a lot? Will you buy a big-ticket item like an RV or mobile home? -
Step 2: Project your future income at retirement.
Look at your shared income.
Calculate how much money you and your partner will have from guaranteed sources that will not depreciate and that you will get every month.
Adding up these sources of guaranteed income will give you and your partner a better idea of what your baseline income will be during retirement.Guaranteed sources of income include things like pensions, social security, and annuity payments. , Once you and your partner have an idea of what you want your retirement to look like, you should try to estimate what your expenses will be in retirement.
Create a budget that takes into account your current spending, as well as those things that you anticipate needing to pay for during retirement.Estimate your base expenses — food, shelter, transportation, health care, and other basic needs.
Once you have established your base expenses, consider discretionary needs such as travel, relocation, etc.
Keep in mind, too there may be unforeseen medical or home expenses that can eat at your savings.
It is always a good idea to err on the side of caution when saving. , Compare your estimated expenses with your guaranteed income.
For most people, the guaranteed income will not be enough to cover all of the estimated expenses.
Therefore, you will need to save some money to make up this gap.For example, if your annual guaranteed income is $30,000, but your estimated expenses are $60,000, you will need to save enough money to cover the $30,000 gap. , Although we all hope to live long lives, outliving your savings can make things difficult for you and your family members.
Ideally, you will want to save enough money to meet all of your expenses as you age and avoid running out of funds at a certain point.
To avoid running out of savings, err on the side of caution and save as if you and your partner are going to live longer than average.In order to get a sense of how long you may live, look at you and your partner’s family history.
If you both have parents or grandparents that lived well into old age, you should save money to support yourselves beyond the average life span.
In the United States, the typical 65-year-old male today will, on average, live to the age of about
84.
The average 65-year-old woman will live to almost
87., Once you have determined your guaranteed income, savings gap, and considered your longevity, you can begin to calculate how much money you need for retirement.
You will need to multiply the annual savings gap times your projected longevity, which will tell you how much money you need to save before you can retire.
You can work with a retirement planner to help or use an online retirement income calculator.
Use a retirement income calculator to help you determine how much you need to save:
CNN Money: http://money.cnn.com/calculator/retirement/retirement-need/ AARP:http://www.aarp.org/work/retirement-planning/retirement_calculator.html Bankrate: http://www.bankrate.com/calculators/retirement/retirement-plan-income-calculator.aspx Remember to factor for inflation.
If you and your partner plan your retirement far enough in advance, you will need to be considerate of inflation.
Inflation can dramatically affect your return on investments, increasing or decreasing how much money you have during retirement.
Although a good return would be welcome, you will want to make sure that you have enough money saved to cover a poor return on your investments., Because retirement savings are legally designed for individuals only, you will need to make it clear who will get your retirement benefits if you die.
Ideally, you would name your partner since the two of you will have shared expenses.
For things like pensions and 401(k)s you will want to make sure that your list your partner as your beneficiary.If your marital status changes, it is important that you update your information with your brokerage firm or the human resources department at your work. -
Step 3: Estimate your retirement expenses.
-
Step 4: Calculate your income/savings gap.
-
Step 5: Consider your longevity.
-
Step 6: Project the required savings to fulfill retirement goals.
-
Step 7: Make clear who your beneficiaries are.
Detailed Guide
As you and your partner begin planning for retirement, it is important that you clearly communicate what you want out of it.
Many couples fail to talk about retirement with their partner, which can lead to incompatible plans and a failure to save properly.Talk with your partner about your retirement savings and ask yourselves what you want to do once you have retired.
Answer these questions with your partner:
At what age do you want to retire Where do you want to live after retirement? What do you want to do after retirement Do you want to leave an estate for others? Do you intend to travel a lot? Will you buy a big-ticket item like an RV or mobile home?
Look at your shared income.
Calculate how much money you and your partner will have from guaranteed sources that will not depreciate and that you will get every month.
Adding up these sources of guaranteed income will give you and your partner a better idea of what your baseline income will be during retirement.Guaranteed sources of income include things like pensions, social security, and annuity payments. , Once you and your partner have an idea of what you want your retirement to look like, you should try to estimate what your expenses will be in retirement.
Create a budget that takes into account your current spending, as well as those things that you anticipate needing to pay for during retirement.Estimate your base expenses — food, shelter, transportation, health care, and other basic needs.
Once you have established your base expenses, consider discretionary needs such as travel, relocation, etc.
Keep in mind, too there may be unforeseen medical or home expenses that can eat at your savings.
It is always a good idea to err on the side of caution when saving. , Compare your estimated expenses with your guaranteed income.
For most people, the guaranteed income will not be enough to cover all of the estimated expenses.
Therefore, you will need to save some money to make up this gap.For example, if your annual guaranteed income is $30,000, but your estimated expenses are $60,000, you will need to save enough money to cover the $30,000 gap. , Although we all hope to live long lives, outliving your savings can make things difficult for you and your family members.
Ideally, you will want to save enough money to meet all of your expenses as you age and avoid running out of funds at a certain point.
To avoid running out of savings, err on the side of caution and save as if you and your partner are going to live longer than average.In order to get a sense of how long you may live, look at you and your partner’s family history.
If you both have parents or grandparents that lived well into old age, you should save money to support yourselves beyond the average life span.
In the United States, the typical 65-year-old male today will, on average, live to the age of about
84.
The average 65-year-old woman will live to almost
87., Once you have determined your guaranteed income, savings gap, and considered your longevity, you can begin to calculate how much money you need for retirement.
You will need to multiply the annual savings gap times your projected longevity, which will tell you how much money you need to save before you can retire.
You can work with a retirement planner to help or use an online retirement income calculator.
Use a retirement income calculator to help you determine how much you need to save:
CNN Money: http://money.cnn.com/calculator/retirement/retirement-need/ AARP:http://www.aarp.org/work/retirement-planning/retirement_calculator.html Bankrate: http://www.bankrate.com/calculators/retirement/retirement-plan-income-calculator.aspx Remember to factor for inflation.
If you and your partner plan your retirement far enough in advance, you will need to be considerate of inflation.
Inflation can dramatically affect your return on investments, increasing or decreasing how much money you have during retirement.
Although a good return would be welcome, you will want to make sure that you have enough money saved to cover a poor return on your investments., Because retirement savings are legally designed for individuals only, you will need to make it clear who will get your retirement benefits if you die.
Ideally, you would name your partner since the two of you will have shared expenses.
For things like pensions and 401(k)s you will want to make sure that your list your partner as your beneficiary.If your marital status changes, it is important that you update your information with your brokerage firm or the human resources department at your work.
About the Author
Deborah Ferguson
Specializes in breaking down complex creative arts topics into simple steps.
Rate This Guide
How helpful was this guide? Click to rate: