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Checklist: 5 Retirement Questions Every Couple Should Ask—and Answer

Even newlyweds can benefit from having this conversation. The sooner you come to an agreement, the easier it will be for you to put a plan in place to pursue your goals.

PLENTY OF DIFFICULT FINANCIAL DECISIONS will come your way as retirement approaches, including questions about Social Security and Medicare, and how best to draw down your retirement assets. But before you even begin to tackle those issues, it helps to have a broader, more personal conversation about what each of you wants your life to be like in retirement.

How will the two of you spend your days? Are there new pursuits you'd like to try? And how important is it for you and your spouse to have a shared vision for retirement?

Use this checklist to get the conversation started. You may be surprised to find that you're not on the same page about some things right away. But keep talking. Make this conversation part of an annual heart-to-heart about your life together—where you are and where you hope to be.

1. Will we retire at the same time?

Many couples find this the toughest question to resolve. One of you may be looking forward to winding down a satisfying career, while the other is still enjoying the pace of full-time work. "Examining the financial impact of different retirement dates can help a couple get past their stalemate," says Karen Burns, head of the Goals Based Consulting Group at Merrill Lynch.



Read "Can a Marriage of (Financial) Opposites Last?" for more on the Islers' path to retirement.

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That was the case for Jerry and Gussie Isler (pictured above). Jerry, who owned an auto industry materials distributorship in Michigan, was looking forward to taking it easy. But Gussie, who managed a number of rental properties, wasn't quite ready to retire. Working with their longtime Merrill Lynch Financial Advisor, Sharon Oberlander, they explored the way different retirement dates might affect their cash flow and retirement lifestyle. Eventually they settled on a strategy that called for Jerry to retire from his business at age 55, then for them to run Gussie's rental properties for 10 years before retiring together. "I encouraged Gussie and Jerry to begin thinking early on about when they wanted to retire, so they'd have a plan in place to make the transition a smooth one," says Oberlander.

"Statistically, women tend to live five years longer than men," says Burns. "Particularly when a wife is the younger spouse, there may be good reason for her to keep working a while longer so that she won't outlive their retirement savings." Having one spouse work longer may also make it possible for one or both spouses to delay claiming Social Security benefits—a choice with a concrete financial reward. "For every year you postpone receiving payments, you increase the size of your benefit," says Anthony Webb, research director of the Retirement Equity Lab at the New School in New York City. "And your spouse will also be in line for a larger survivor's benefit."

2. How will we spend our days?

Decisions about travel, family time, volunteer work and other retirement pursuits are as individual as the couples who make them. But different choices carry different price tags, so it's important to have at least a broad outline of how you want to spend your time together. Try making a list of short- and long-range retirement objectives with your spouse each year, suggests Burns. "If the same goals keep reappearing on each of your lists as you get further into thinking about what you want, that’s a sign that they may be really important to you." As you get closer to retirement, “have some long talks with your spouse to work out the differences between your two lists and figure out a plan for accommodating each of your most important priorities.”

"Spouses don't have to have the same investing style, but their investments need to work together so that they're properly diversified."
—Sharon Oberlander, Merrill Lynch Financial Advisor

3. Where will we live?

Your choice will most likely have a major impact on your retirement finances. Downsizing from a house to a condominium could free up cash to bolster your savings and might also reduce outlays for property taxes and upkeep. Houses age, too, and if you keep the family home, its maintenance needs are likely to increase. On the other hand, relocating could boost—or lower—other expenses. State income taxes and local property taxes, as well as the overall cost of living, can vary widely by location.

Stacy Allred, managing director and head of Merrill Lynch Wealth Management Center for Family Wealth, remembers a couple who were trying to decide whether to stay in California or move to Washington State, where their adult children had settled. The decision became much easier when their accountant mentioned that Washington has no state individual income tax. Nor do six other states—Alaska, Florida, Nevada, South Dakota, Texas and Wyoming—though some impose other levies, such as Washington's state estate tax.

4. Whose investing style will we follow?

"Examining the financial impact of different retirement dates can help a couple get past their stalemate."
—Karen Burns, Head of the Goals Based Consulting Group, Merrill Lynch

During your working years, you and your spouse may have managed your own 401(k)s and IRAs in line with your individual risk tolerances and investment preferences. That doesn't have to change as you move into retirement, but it's important to work with your financial advisor to coordinate an overall portfolio that serves your mutual goals. "Spouses don't have to have the same investing style in retirement, but their investments need to work together so that they're properly diversified," says Oberlander.

As Americans live longer, it's also "increasingly important to continue to explore investment strategies that will help your portfolio continue to grow even as you begin to draw down on it," says Debra Greenberg, a director in the Personal Retirement Solutions Group at Bank of America Merrill Lynch.

5. Will we leave our money to the kids or to charity?

That this question even comes up means that you've worked through the basic issues, but it may still inspire passionate conversation. Allred recalls one heated discussion between a self-made businessman who felt strongly that his children should make their own way financially, and his wife, who was adamant about sharing their wealth with the kids. Their solution included establishing a multigenerational health and education exclusion trust, or HEET, which is designed to see to it that the children and future descendants will not have to worry about medical or college costs.1 The couple also agreed to help their children with home purchases and to set aside a fund for each child to cover emergencies or retirement. Satisfied that they had responsibly provided for their children, they gave the rest of their estate to charity.

3 Questions to Ask Your Advisor

  1. Can we both afford to retire now?
  2. When would it make the most sense for us to begin claiming our Social Security benefits?
  3. What strategies can help our investments continue to grow after we retire?


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1A HEET is a trust created during life or at death to which none of a donor’s generation-skipping transfer (GST) exemption is allocated, but the funds may be used for education and medical expenses of grandchildren and more remote descendants paid directly to the educational institution or medical provider.

Case studies are intended to illustrate brokerage and banking products and services available at Merrill Lynch and Bank of America. You should not consider these as an endorsement of Merrill Lynch as an investment advisor or as a testimonial about a client’s experiences with us as an investment advisor. Case studies do not necessarily represent the experiences of other clients, nor do they indicate future performance. Investment results may vary. The investment strategies discussed are not appropriate for every investor and should be considered given a person’s investment objectives, financial situation and particular needs. Clients should review with their Merrill Lynch Financial Advisor the terms, conditions and risks involved with specific products and services.

Neither Merrill Lynch nor any of its affiliates or financial advisors provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

Diversification and asset allocation do not ensure a profit or protect against loss in declining markets.

Any information presented about tax considerations affecting client financial transactions or arrangements is not intended as tax advice and should not be relied upon for the purpose of avoiding any tax penalties. Neither Merrill Lynch nor its financial advisors provide tax, accounting or legal advice. Clients should review any planned financial transactions or arrangements that may have tax, accounting or legal implications with their personal professional advisors.

Bank of America Merrill Lynch is a brand name used by several Bank of America Corporation businesses, including, but not limited to, Retirement and Philanthropic Services. Bank of America Corporation is a financial holding company that, through its subsidiaries and affiliated companies, provides banking and nonbanking financial services.

This material should be regarded as general information on Social Security considerations and is not intended to provide specific social security advice. If you have questions regarding your particular situation, please contact your legal or tax advisor.


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