No one wants to be a selfish retirement planner. How do you make sure you're thinking about your partner's goals and dreams, not just your own? To learn the best saving and retirement advice for couples, Family Goes Strong talked with AARP Bulletin financial columnist Jane Bryant Quinn. Excerpts:
What happens when one partner is ready to retire – and the other one isn't?
Even if you're planning to retire, and you're happy not to have the stress of working 9 to 5, it is nevertheless a very stressful time. It involves loss of status [and] a lot of emotional issues. It is a more difficult transition than people often think. Then if the other spouse is still working, that adds a layer of difficulty because who are you going to play with? Try to make a list of what the issues might be. What is the retired spouse going to do? The working spouse may say, "You ought to do more stuff around the house than you did before." The husband may feel that she is bossing him around. The man may say, "You ought to retire, too, and we ought to go live in the country and do something different." She may not want to retire yet. Retirement, even for people who are retiring together, is a difficult problem. When you're retiring separately, it becomes even harder.
Couples tend to overspend in the first few years of retirement. Why, and how can they prevent it?
What happens is that they haven't taken a really good look at their budget. When your paycheck stops, you have less money. It's pretty simple. It's astonishing to me the number of people who don't plan for the fact that their paycheck has stopped.
You suggest couples live off their expected retirement income for one year before anyone stops working.
Test it by not spending the income of the person who's still working. It has a double value. First, you get a look at reality. Second, you can save that person's income. It gives you a solid real look at whether that person should retire and what you should do to adjust your lifestyle. I'm a huge believer in going to a financial planner at this point in your life [to] figure out, "How am I going to make my savings last for the rest of my life?" You don't know how long you're going to live, how much you're going to draw down on your savings, what's reality here. Even a one-time visit with a financial planner, a planner who doesn't sell you stuff, who just charges you for going through this exercise, is incredibly valuable. It gives you, probably for the first time, a long-range look at how much you can afford to spend. If you overspend your retirement income, you're going to be broke at 80. Then what are you going to do? Your kids are your safety net? You're going to move in with your kids? That's not what people want.
And how do couples figure out how they're going to fill their time?
You have to re-establish an identity. It could be volunteering, or it could be being the greatest grandparent in the world, or it could be, "I'm going to take a course." I know a man who retired from DuPont as a high executive and got rapidly very bored with golf, and he went back to school and got a master's in history. There are retiree groups that travel. Some people start small businesses in retirement. You have to find something else to do other than stare at a TV set. Becoming a retiree is a job, and you have to work at it. The business of finding a retirement identity is extraordinary important, and it can be difficult.
How will the expected changes in tax rules affect retirement plans?
We have to find out what the new tax rules are. There's just no sense in rushing around and trying to change your life all of the sudden. Everyone is assuming there will be more taxes, and there probably will be. But if you say, "I'm going to sell all my stocks before the end of the year because capital gains taxes might go up next year," what kind of investor are you? Then what are you going to do with the money? Are you going to put it in the bank? Are you going to reinvest? You've got less money because you've sold, and you've paid the taxes. Why would you sell your stocks to pay 15 percent [taxes], and then put it in the bank? That makes no sense.
What about people who are thinking about rolling their 401(k)'s into Roth IRA's so they can pay taxes now rather than presumably higher ones later?
If you're in your 40s, you have maybe 20 years ahead, so why should you move any money out of the stock market? You gradually get more conservative as you get older. I don't know what the taxes are gong to be, and neither do they. You're not going to do something between now and December just because tax rates are going up in January. Taxes shouldn't run things for you.
What is your retirement plan with your own husband?
The most recent thing my husband and I did is start a business, became Internet entrepreneurs. We looked around and said, "Nobody under 40 reads news on paper." My husband [Carll Tucker] had a company that did local news in Westchester County [in New York]. He sold in 1999 to Gannett, so he retired early. We started the Daily Voice. It has 55 sites in Westchester County, Fairfield County [Connecticut], and central Massachusetts. We brought in someone who had two digital startups. Carl became chairman of the board. He is also enrolled at Columbia as a classics student. He is now studying ancient Greece. He's chairman of the board, he's involved in everything, but it's not full time. And I am not full time, but I'm writing for AARP, and I'm writing for a new site called DimeString.com. Whatever it is, you find something else to do.
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