Financial Planning for Couples: How to Achieve Your Shared Goals

Whether you're a newlywed, married or are in a long‐term relationship, most couples recognize communication and shared goals are key to happiness. Many couples discuss lifestyle goals such as where to live and work; whether to have children and if so, how many; where to vacation or spend the holidays; and more. But many neglect one critical topic that impacts relationships more than we like to admit: finances.

Money and financial goals are more difficult to discuss and are often ignored. Sharing financial goals and plans as a couple is critical to achieving financial security and peace of mind and being in sync on finances may also make for a stronger relationship. A recent survey revealed that 94% of couples who described their marriage as "great" are twice as likely to discuss their financial goals together, compared to 45% of those who said their marriage is "okay" or "in crisis." While many couples realize the importance of communicating on money matters, the reality is that many couples avoid talking about uncomfortable topics like debt or long-term planning like retirement.

A 2021 Survey revealed that the top two financial arguments couples disagree on are regarding retirement: 51% disagree on how much to save for retirement and 48% disagree on the age to retire. Saving enough for retirement is a tough subject across multiple generations — from Millennials to Baby Boomers — and it's the leading financial factor that keeps spouses up at night, with 56% of Millennials, 58% of Gen Xers and 34% of Baby Boomers losing sleep over retirement savings. However, these aren't the only difficult factors facing couples and their financial planning strategies:

Among the Findings

While there are outside factors that present challenges for couples, many of these arguments and disagreements could be prevented if financial planning is openly communicated and decided upon early in their relationship. In fact, 84% of couples that communicate well are likely to say that money isn't their greatest relationship challenge, according to Fidelity. If couples prioritize their combined financial well-being and view financial planning as a project that works for the betterment of both of their lives, it can only benefit their relationship. Here are some financial planning tips for couples that you should keep in mind when planning your financial future together, especially when approaching retirement:

Nine Financial Planning Tips for Couples

Start the conversation

Your first discussion with your partner should be a big-picture discussion, so you can assess whether you want the same things and how you might be able to adjust if you don't. Here you should define your goals, discuss priorities and set the foundation. At Johnson Financial Group, our advisors often suggest couples write a wealth mission statement together, putting into words how they'd like to manage their wealth over time. This first step is critical for setting you up for long-term financial success.

Ask questions, identify differences or concerns

While it's important to discuss your financial goals, it's equally important for each spouse to discuss their questions or concerns together. For example, one spouse might be a saver and the other a spender; one might be more concerned about debt than the other. Even if both spouses are savers, their priorities might vary significantly. This exercise can also reveal areas of worry that either or both spouses weren't aware of and will be helpful as you design or adjust your financial plan.

Determine your risk tolerance

Financial advisors commonly talk with clients to assess their tolerance for risk. Some couples may want to have each spouse meet individually with the advisor so they can conduct separate risk assessments. Then, your advisor can get a true feel for everyone's comfort level without the influence of a spouse. Surveys often reveal significant gender differences in risk tolerance, with men generally less risk‐averse than women. Studies also show women tend to have lower risk tolerance than men. 

Identify important goals and priorities

Establishing mutual financial priorities will make your planning smoother, especially if the economy experiences a downturn and you need to adjust. Together, you should discuss topics like desired lifestyle needs, retirement, funding your children's education and your philanthropic intentions. Listen carefully, pay attention to details and determine a path moving forward that aligns both of your long-term goals. Alignment and consideration of each other's wants and needs will prevent future resentment if you're not in agreement. For example, if one spouse plans to retire early and the other wishes to keep working, the working spouse could be resentful of the retired spouse if they didn't communicate their plans earlier in their relationship.

Consider consolidating portfolios

It's likely that each spouse will have his or her own 401(k) plan, making it critical to coordinate asset allocation across those separate accounts. As you leave work and proceed through retirement, you may consider simplifying your finances and consolidating accounts where possible. Simplifying your portfolio will also make it easier if one spouse is or becomes unable to participate in planning.

Understand your options

Each spouse should have a thorough understanding of his or her options concerning retirement income and benefits with an eye on what is best for the couple. For example, post‐retirement healthcare benefits will have a significant impact on your monthly and annual costs, as will options within any pension plan, military or other employer‐sponsored defined benefit plans available to either spouse. When to claim Social Security benefits is a major decision but claiming strategies for married couples can be complicated. Although most individuals can claim Social Security benefits at age 62, you can increase your eventual monthly benefit by as much as 8% per year by deferring it until you're older. Once you have evaluated all the choices available in benefits and income, you can determine the best course for your mutual situation.

Test your plan

It's important to give serious thought to unexpected, worst-case scenarios to determine whether you have the financial means to cope and maintain your desired lifestyle. For example, consider whether you're prepared for a serious illness with unexpected medical bills, the death of your spouse or moving out of your home because of a natural disaster. Once you've thought through and had these tough conversations, put together backup plans so you're ready if these situations arise.

Plan your estate

Once you and your spouse have thoroughly discussed your financial situation and taken steps to align your priorities and goals, you should create an estate plan (if you haven't already). Having an estate plan in place helps ensure you and your spouse’s finances will be handled as you wish. An estate plan may also allow you to avoid probate court and make provisions to care for and protect children and other beneficiaries. Contact your financial advisor or find an advisor to get started or revise your estate plan.

Keep each other informed

After your entire financial plan is in place, you should commit time to discussing money, either quarterly or annually. This will ensure your goals stay aligned, and you're making choices that support these mutual goals (and if not, how you will proceed). If one person is handling the paperwork and making changes, you can also use this time to review accounts, asset allocations and results together. You should also discuss if there are any updates to paperwork information, like account numbers, passwords and where your account information is stored so you're both in the loop.

Ready to start a conversation? Contact your advisor or find a financial advisor that prioritizes your financial life as much as you and your partner.