Planning: He, She Disagree

Submitted by Eve Kaplan on Monday, April 16, 2012 - 3:00pm
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A financial plan is like a long-distance car trip. But with couples, two people are behind the wheel. They don’t always agree on which route to take.  
That is no reason to put off making a plan. If there is no plan, they risk frustration and failure to fulfill dreams. There is no worse sentiment than regret. The question is: What kind of future do you really want for yourself and the people in your life who are most important to you?
An April 9 Wall Street Journal article (“He Wants to Retire…but She Doesn’t”), cites a study by Fidelity Investments that highlights the problems of making a plan. Couples disagree on when to retire (62%), whether to keep working in retirement (47%) and on lifestyle expectations (33%).
A plan enables a couple to evaluate the costs of various wish lists and select strategies that satisfy both husband and wife. A neutral party, their financial advisor, provides the forum for an open and non-judgmental discussion, then weighs in with numbers to aid the decision making.
Like a road trip, your financial life is a journey that needs to be navigated carefully. After a financial advisor checks your entire car to make sure it will withstand the journey, the advisor creates a GPS system for you to help you stay on track.
Here’s a specific example, gleaned from hundreds of clients I’ve worked with. Judy and Bill are in their late 50s, live in New Jersey, have grown children and are looking to retire in the next 10 years. They’ve never worked with a financial advisor before. They disagree on retirement expectations. When they visit me, we have an open discussion.
Bill dislikes his job and wants to retire “yesterday.” He’s willing to work to age 63, but wants to winter in a warmer climate. Judy enjoys work and wants to continue her current job into her late 60s, assuming her health and employer permit it. After retirement, she may consider spending part of a year in a warmer climate if it makes financial sense. Judy and Bill agree on other goals – such as the amount of money they’d like to spend on their daughter’s wedding, their annual travel budget and the need for long-term care insurance.
Can they afford to allow Bill to retire at 63, and to purchase a place in a warm climate? Or does it make sense to rent? How do they emotionally and financially negotiate staying in New Jersey if Judy wants to retire after Bill?
A good financial plan creates decision trees that show Judy and Bill some preferences, such as buying a condo in a warm place now, probably aren’t financially prudent. A plan also helps Judy and Bill avoid costly decisions they may regret later. For example, how should Bill structure his pension payout to make sure Judy receives something if he dies prematurely? Should they consider long-term care insurance? If so, what is the best kind? What kind of estate planning should they do?
A good financial plan will bend to Judy and Bill’s wishes, but guide them toward choices that have the best possible financial outcome. Their destination on their financial road map is making it to the end, comfortably, with money to spare.
My role is to give them the best road trip instructions possible, consider the right fuel (restructuring their investments), offer estate planning advice, minimize taxes and consider insurance alternatives. I do this by consulting trusted professionals I work with, like an insurance agent.
In the end, it’s all about making sure you design a trip that makes sense – and gets you safely to your destination.
Eve Kaplan, CFP, is a fee-only advisor in Berkeley Heights, N.J. Kaplan Financial Advisors is a Registered Investment Advisor in New Jersey and New York. 

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