Retirement Planning Tips for Dual-Income Couples

Retirement planning, to ensure sufficient income and prepare for potential financial or health crises, is challenging enough for individuals. But it can be far more complex for couples. Add to the mix a second marriage, varying resources and divergent (possibly conflicting) plans for the post-employment future, and conversations can become difficult.

Q. Although my husband and I have been happily married - second time around for both of us - for six years. Now that retirement is looming I sense that things could get contentious if we don't start looking at our future picture jointly now. We're both 58 and have comparable incomes of approximately $100,000 and comparable retirement account balances but with separate portfolios. I have considerably more resources now because I've inherited two properties, and he's a bit of a spender. How should we begin?

A. The reader's question makes it clear that the retirement-planning conversation didn't make it to the forefront when the couple joined their lives, but that's not a surprise. Even long-married dual-income couples put off that important discussion.

To start, talk openly and ideally happily, about the future, especially planned retirement dates and resources. That date (or dates if they'll necessarily be different for each spouse) is a key issue. First, the end of employment must be both financially and practically realistic - in terms of income needs and accumulated assets. Example if one spouse wants to continue working but the other is chomping at the bit to leave the job and move to a smaller community, serious negotiations are ahead.

Ensure sufficient diversification within both portfolios. Take a comprehensive look, ideally with a financial professional, at how both spouses' portfolios stack up on the diversification scale. Even if the portfolios appear similar, one spouse's overall risk level could be considerably higher than the other's. That can occur when, for example, the balance between growth equities and "steady-Eddy" securities isn't ideal, or the extent to which holdings are weighted in particular industry sectors is potentially risky. Overall, the key is ensuring there's sufficient diversification among various asset classes - from stock or bond funds, to real estate and liquid or cash investments.

Talk about the tough stuff, while there's time on the horizon. It's never too soon - or too late - to talk about individual financial objectives and habits (positive and detrimental). The latter can be an explosive topic, but if the discussion starts with the topic of shared goals, and how habits or styles might undermine goals, headway can be made.

SOURCE: http://www.dailybreeze.com/business/ci_19192065