5 Money Conversations Couples Should Before Retirement

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5 Money Conversations Couples Should Have Before Retirement

Why it's important to get on the same page about how you'll spend your golden years.

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Retirement for you and your spouse is just a few years away. Maybe you're both eagerly awaiting the days when you no longer must commute to work, sit in long meetings, and turn in reports.

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But retirement does come with its own challenges, many of them financial. It's important for spouses to have the same expectations of what their retirement years will look like. And it's equally important for each spouse to understand where their income will be coming from and how much money there will be.

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Here are five key conversations that couples must have before retirement arrives.

1. What kind of retirement do you both want, and how expensive will it be?

There are many different ways to spend your retirement years. Maybe you want to travel the world. Maybe you'd prefer spending more time with your grandchildren. Your version of a dream retirement might consist of days on the golf course or fishing on the lake.


But what if you have the travel bug, and your spouse would prefer to sit home and catch up on some reading? These are two radically different versions of retirement. And, when it comes to your retirement finances, one is far more expensive than the other.

It's important for you to share your retirement expectations with your spouse before you actually leave the working world. If you both agree that plenty of travel is in your future, you'll need to work hard to make sure you'll have enough retirement dollars to fund these trips. If only one of you wants to spend time traveling or pursuing a more expensive hobby, you'll have to craft a compromise.

2. Where will the money come from, and how much will you have?

As retirement nears, couples must work together on a new household budget tailored to their new life after work. You won't be able to rely on that steady work income after retirement, and Social Security payments probably won't cover all your daily living needs. This makes writing a household budget — and agreeing to stick to it — more important.

Your new budget should list all of your sources of monthly income and all of your expected monthly expenses, including mortgage payments if you still have them, car payments, utility bills, groceries, and entertainment. Once you've listed your income and expenses, including how much of your retirement savings you'll need to dip into each month to cover these expenses, you'll have a clearer picture of how much you can spend each month after leaving the working world. (See also on WiseBread.com: 6 Ways You Can Cut Costs Right Before You Retire)


SEE ALSO: 10 Best States to Protect Your Retirement Nest Egg From Taxes

3. Where will you live?

Housing expenses can be a challenge after retirement. It's important for couples to discuss where they'll live after leaving the working life behind. Do you want to stay in your current home for as long as possible? The financial ramifications of this will vary depending on whether you've paid off your mortgage or not. It might make more sense to sell your home and move into a smaller condo or apartment. Or maybe you're ready to move into a senior housing facility.

Don't put off conversations about housing. This is one of the most important issues couples face after retirement. (See also on WiseBread.com: Retire for Half the Cost in These 5 Countries)

4. Will one of you take on a new job or career?

Retirement doesn't always mean that you or your spouse won't continue to work in some way. Some people take on part-time jobs to occupy their time and earn a bit of extra spending money. Others start the new careers that they've always desired. (See also on WiseBread.com: 6 Great Retirement Jobs)

It's important for couples to discuss their plans for working after retirement. One spouse — or both — holding down a part-time job can make a significant difference in your income and budget after retirement, even if this income isn't essential to covering your daily living needs.


5. How will you handle unplanned expenses?

Unexpected expenses aren't unusual while you're working, with everything from burst water heaters to serious medical problems eating away at your savings. The same unexpected expenses can pop up when you're retired, too. When they do, how will you pay for them?

SEE ALSO: 10 Worst States for Taxes on Your Retirement Nest Egg

Talk with your spouse about maintaining an emergency fund that can cover at least six months' worth of your daily living expenses after retirement. If you don't maintain this fund — which you should have had while you were working — one big unexpected expense could wreak havoc on your budget. (See also on WiseBread.com: 9 Unexpected Expenses for Retirees — And How to Manage Them)

This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website.

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This article is from Wise Bread, not the Kiplinger editorial staff.