Retirement planning may not be your idea of an exciting date night. However, retirement strategies and goals are so varied that couples in committed relationships need to set aside time to discuss plans for when they leave the workforce for good. Here are some questions to ask your significant other—and yourself—when planning for your shared retirement. 

How Do You Envision Your Retirement?

Although you do not need to have the same retirement vision as your spouse, some compatibility is important. For example, if you hope to fulfill all the travel plans you put off for years while your spouse dreams of home improvement projects, you may want enough retirement savings to pursue both goals.

Talking through your perspective on retirement plans may help you assess where you may need to compromise and identify the goals and dreams you have in common. The last thing you want is to arrive at retirement age and then realize that you and your partner have very different ideas for spending the next couple of decades. 

When Do You Want To Retire?

You and your partner may not need to retire at the same time—and in some situations, especially when one partner carries the health benefits, a staggered retirement plan may make more sense. This strategy might allow your household to manage expenses while allowing retirement accounts to continue to grow until the other partner retires. At that point, you might begin withdrawing from your 401(k)s, IRAs or other savings sources.

A corollary to this question is, “When do you think you may have to retire?” Some highly-physical or mentally-stressful jobs may require an earlier retirement than less consuming jobs. You may want to consider transitioning into a different position near the end of your career. In other cases, you or your partner may have health issues that necessitate an earlier retirement. 

What Is the Current Status of Your Retirement Account(s)?

It is important to check in on your retirement balances periodically and the types of accounts where these funds are held. You might have retirement savings in a mix of tax-deferred and post-tax accounts, as this might allow you to manage your taxes in retirement better. 

For example, suppose you have some funds in a post-tax account like a Roth individual retirement account (IRA) and other funds in a traditional 401(k). In that case, you might take withdrawals from your 401(k) up to the amount of your federal standard deduction. Then, take tax-free withdrawals from your Roth IRA to fill in any budget gaps while managing the federal and state income taxes you might pay for that tax year. 

By ensuring that both you and your spouse know about how much you save, how much you need now and how much you need to have in the future, you may be in a better position to make long-term plans and remain in agreement about them. Open communication about financial matters usually supports a healthy, long-term commitment to each other.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal.  Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.

The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.

This article was prepared by WriterAccess.

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