If you and your spouse are approaching retirement, this is likely an exciting time. You’ve probably spent a significant amount of time discussing your hopes and plans. You may want to travel, spend more time with family or perhaps even just relax and enjoy your newfound freedom.
As enjoyable as it may be to dream about retirement, it’s also important you and your spouse engage in substantive planning discussions. Far too many couples don’t talk about the work they still need to do to retire comfortably. As a result, they may find they aren’t able to enjoy the type of retirement they had hoped for.
Below are three conversations every couple should have before they head into retirement. If you and your spouse haven’t talked about these issues, now may be the time to do so.
Do we have a budget?
Don’t use a household budget? You’re not alone. According to a Gallup poll, 68 percent of American households don’t use a budget.1
You may think a budget isn’t necessary in retirement. After all, you’ve gotten this far without one. However, retirement often presents new challenges, many of which can be avoided or minimized with a budget in place.
For instance, after you retire, you may have more free time available than you’ve ever had as an adult. You will likely look for ways to spend that free time. Many retirees fill the void with costly activities, such as traveling and shopping. As a result, they withdraw more than they can afford from their savings, thereby creating financial issues in later years.
A budget helps you understand how much money you have to spend on discretionary items. If you’re spending too much, you can use your budget to make adjustments. It’s a powerful planning tool that can help you make your savings last. If you and your spouse don’t have a budget, you may want to talk about creating one.
How will we pay for medical costs and long-term care?
Many retirees assume Medicare will cover all of their health care costs. This is usually a mistake. While Medicare is a very helpful tool, it doesn’t cover everything. You could still have deductibles, premiums, copays and more. In fact, Fidelity recently found the average 65-year-old couple could expect to spend $245,000 in retirement on those items.2
Another potentially major expense is long-term care. The U.S. Department of Health and Human Services estimates 70 percent of Americans over the age of 65 will require long-term care at some point.3
In some cases, long-term care may be required for years. It could be a costly process, and it may drain much of your retirement assets. There are steps you can take today to prepare for long-term care costs. The earlier you take action, the more options you may have available.
What happens after we pass away?
You and your spouse have likely worked hard to expand your career or business, raise a family and maybe even build a legacy. You probably want to pass that legacy on to the next generation. You also may want to consider your finances and health near the end of your life, and what kind of decisions you’ll want made on your behalf.
There are a number of documents that can be used to pass assets on to your heirs and to manage your health and finances should you become physically unable to do so. Wills, trusts and powers of attorney can all be part of the equation.
Determining which documents you require really depends on your unique needs and goals. An estate planning attorney or a financial professional can help you better understand your estate planning requirements. However, it all starts with a conversation between you and your spouse. If you haven’t discussed your estate plan, now may be the time to bring it up.
Ready to start the conversation? Contact us at Foote Financial Group. We can help you and your spouse identify your needs, prioritize your goals and implement an action plan so you can enter retirement with confidence. Let’s connect today.
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