6 Mistakes Couples Make When Planning for Retirement "Credit News 24"

Failing to go into financial details

Most couples have an idea of what they want retirement to look like, but they don’t go into specifics when it comes to money. It’s important to determine how much they need based on a budget that splits expenses into essential living expenses and extracurricular spending. Experts believe that a millennial will no longer be able to retire with $1 million, with The Street predicting millennials will now need $2 million to retire, per person.

Leaving each other in the dark

Some couples fail to go into their financials at all, leaving each other without an idea of how prepared their partner is for retirement. A NerdWallet study discovered that out of couples with a brokerage account, 43% of them fail to discuss financial decisions with their partner. On top of that, 21% of people don’t know how much their partner has saved up in their retirement account. Setting up weekly dates can help both partners keep tabs of where they’re at financially.

Assuming they don’t need an emergency fund

Having a financial cushion to help you overcome any unforeseen expenses is a common mistake couples make. Money comes and goes, but you can avoid dipping into your retirement account by setting up an emergency fund. Unexpected health problems, home repair and vehicle expenses all happen, and the best way to prepare for them is by having a liquid account containing three to six months worth of expenses.

Immediately buying a retirement home

It’s tempting to buy your dream home as soon as you step out of the workforce, but the wiser move is to either stick with your current home or to downsize. You’ll have to worry about more than just house payments as electric bills, cable bills and property taxes are likely to be higher. Plus, buying a house is not the smartest of investments as its value is not liquid.

Choosing a single-life vs a joint-life pension

A solid pension can help to get you through retirement, but it won’t necessarily do the same for your partner. If one person’s pension is the couple’s main source of income, a joint-life pension will go a longer way than a single-life one. The main difference between the two is that a single-life pension stops once a person dies, meaning the living partner will not reap the benefits of that retirement plan anymore. A joint-life pension passes the fund over to the deceased person’s significant other.

Underestimating post-retirement health care costs

It’s no secret that elderly people experience more health issues than they did in their youth, and many couples are not prepared for how much medical expenses will cost them. HealthView predicts that a 65-year-old couple retiring today will have to spend $404,253 in Medicare premiums, supplemental insurance premiums, dental premiums and out-of-pocket expenses. For a 55-year-old retired couple, that figure is north of $1 million.

Making sense of it all

Inflation and higher health care premiums have the potential to put a damper on your retirement plans. Nevertheless, keeping these sound financial practices in mind and making joint decisions will put both of you on solid ground for the rest of your days.