This Valentine’s Day, Help Your Clients Give Their Financial Plans Some Love, Too
by Lauren BrouhardMs. Brouhard is the senior vice president of retirement at Fidelity. Visit Fidelity.com
Couples show their love for one another on Valentine’s Day in various ways: buying cards, chocolates and roses are just a few. While these are all classic displays of affection, realizing a common dream together may be the ultimate gift —and establishing long-term financial goals is a key step in making that dream a reality.
However, the unfortunate truth is that many couples disagree about their financial future together or worse, don’t speak about it at all. This can often present an interesting set of challenges for financial professionals trying to guide couples by helping them set shared financial goals.
Take the Fidelity Couple Quiz: How Financially Compatible Are You
According to Fidelity’s fourth Couples Retirement Study , nearly four in 10 couples disagree about the lifestyle they want in retirement. What’s more, 51% admit to arguing either frequently or occasionally about money—and 38% never resolve these arguments in a mutually satisfying way.
Even if couples rarely fight about money, that doesn’t mean they are truly in sync. In more than one out of three couples, only one person knows where important financial and legal papers are kept. And roughly one third disagree about who the primary beneficiary is on their life insurance (31%) and retirement accounts (27%).
Lack of communication about money matters can be costly to couples, both financially and emotionally. To avoid common misconceptions and disconnects, here are some hot-button financial topics for your clients to consider throughout their lifetime together:
Baby Boomers (born 1946–1964)
- Residence in Retirement. Twenty-one percent of Boomer couples disagree about where they want to live—despite the fact that retirement may be fast approaching.
- Funding Your Future. Make sure that when you stop working, you have enough to support your lifestyle. Many people are living more active lives and retirement could last 30 years or more. To see where you stand, use Fidelity’s Retirement Quick Check ii.
- Shared Vision. Thirty-seven percent of Boomer couples disagree on the lifestyle they expect to live. If your idea of retirement is travelling the world while your partner is looking forward to spending more time at home, it may be difficult to plot the right financial plan.
Gen X (born 1965–1977)
- Insurance Policies and Retirement Accounts. Approximately three in 10 Gen X couples disagree about who the primary beneficiary is on their life insurance (31%) and retirement accounts (26%), and over a third agree they both don’t know where important financial and legal documents are (35%).
- Tomorrow Fund. Providing school supplies for the kids, saving for college, and taking family vacations are all important, but make sure you’re setting enough aside for retirement through a 401(k), an IRA or other tax-advantaged savings vehicles. The earlier you get started, the bigger the long-term impact.
- Maximizing Work Resources. Make sure you’re both making the most of your employer’s retirement plan—at least up to any company match—and other benefits like health savings accounts, if available.
Gen Y (born 1978–1988)
- Joint Planning. Only 45% of Gen Y women say they are a joint decision maker when it comes to retirement savings, and 36% of Gen Y-ers say their spouse or partner is primarily responsible for decisions regarding their retirement. Gen Y-ers have the power of time on their side, and the ability to build a solid retirement savings account by starting early and saving as much as possible.
- Big-Ticket Items. Discussing “milestone” events early, like buying a house or starting a family, takes pressure off making those important decisions down the line.
- Investment Style: Make sure to get to know your planning and investing styles. Are you on the same page about your risk tolerance and goals? Knowing what you own as a couple is important for maximizing long-term growth potential.
This Valentine’s Day, while money may not be top of mind the moment your clients raise a glass to celebrate years as a happy couples, it’s critically important that they find a time to align their future dreams with their finances. And they might consider these serious questions: What financial discussions should I be having with my significant other? How do I approach these conversations to make sure that we’re on the same financial page?
For couples looking to understand each other’s financial personalities and start financial conversations, we’ve developed Fidelity’s Couples Quiz. Whether their views are far apart or in lock-step with one another, Fidelity offers a number of additional resources that can help along the way, such as informational Viewpoints articles—like “Who manages the money in your family?” and “Five financial tips for newlyweds”—and retirement calculators and tools.
Answering these questions—and then, getting some agreement with the ones they love—can help ensure that their life together ends “happily ever after” when it comes to family finances.
What are your plans for Valentine’s Day?