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It’s Time to Talk about Retirement

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By Andrea Coombes

6-22-homespunRISMEDIA, June 22, 2009-(MCT)-Maybe they can agree that their savings have been mauled by the worst financial crisis in decades, but many married couples agree on little else when it comes to planning for retirement, according to a survey released last week.

Only 38% of couples said they make decisions together about their retirement finances, and only 15% of couples are confident that either spouse is prepared to assume financial responsibility if one spouse dies, according to the survey of 502 married couples conducted online in April by Richard Day Research for Fidelity Investments.

Sixty percent of couples don’t agree on either the husband’s or wife’s retirement age, up from 56% in the same survey in 2007. Forty-four percent don’t agree whether they’ll continue working in retirement, up from 42% two years ago. And 42% disagree on whether they’ll be well off in retirement or just getting by, up from 37%.

“Couples are not on the same page and in some cases they are not even reading the same book,” said Kathleen Murphy, president of personal investing at Fidelity Investments, in a conference call with reporters.

At the very least, both need to agree on basic assumptions that impact financial planning – when they plan to retire, whether they will continue to work part time and what lifestyle they hope to maintain,” Murphy said.

Unlike many surveys of married people, this survey queried both people in a marriage, thus affording a look at how spouses’ beliefs differ. Participants were between about 45 and 72 years old (with an average age of 55 for husbands and 54 for wives), with household income of at least $75,000 or investable assets of $100,000 or more.

More couples found agreement when asked about worrisome retirement road blocks, with 57% of couples agreeing that unexpected health-care costs were a concern – a decrease from 70% who agreed on this in 2007 – and 41% agreeing that inflation is a worry, up from 28% in the survey two years ago.

Nineteen percent of couples both agreed that they worried that their Social Security benefits would be reduced, down from 23% who agreed that this was a worry in 2007.

Financial Crisis Hits Home

Couples’ expected retirement age has increased by a year, on average, since the 2007 survey, with husbands expecting to retire at age 64, up from 63 two years ago, and wives expecting to retire at age 63, up from 62. Meanwhile, 40% of couples said one or both spouses will continue to work part-time in retirement.

And, for some couples, their risk tolerance has declined since the market turmoil, with 54% of wives and 41% of husbands saying they are less risk-tolerant now. Still, 42% of wives and 52% of husbands said they maintained the same level of risk tolerance.

Another source of disagreement for couples: Their sources of retirement income.
For instance, 44% of couples disagreed on whether or not they would sell real estate, 42% disagreed on whether brokerage or mutual-fund accounts would be a source of income, 39% disagreed on whether they would rely on an annuity, 30% disagreed on whether they had a company pension, and 26% disagreed on whether they have an IRA.

But they may not even be aware of each other’s disagreements: 44% of couples agree that they never argue about money, an additional 32% said they argue about money occasionally. Just 1% said they argue frequently. Still, 22% disagree on how often they argue about money.

Advice for Newlyweds

When asked about the best financial-management advice they’d give to newlyweds, 57% of the couples agreed it would be “make all financial decisions together.”

The survey findings, however, show that “many are not heeding their own advice,” Murphy said.

Thirty-four percent said the best advice would be to “make a budget and stick to it,” according to the survey, which allowed multiple responses to this question.

Twenty-nine percent agreed the best advice is to “have an emergency fund to cover at least six months of expenses,” 16% agreed that newlyweds should “not hide expenditures from each other,” and 14% said “disclose your income, debts and assets to each other before getting married.”

©2009, MarketWatch.com Inc.
Distributed by McClatchy-Tribune Information Services.

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