Most American couples say they trust their spouse or partner regarding financial matters. Yet a noticeable number reveal they aren’t necessarily in agreement over the fine print. Examples include how much money they’ll need for retirement, or leave to family, a recent survey found.
More than 1,500 couples in the U.S. (or 3,020 total respondents) with $100,000 or more in investable assets were surveyed in January for the Ameriprise Financial study. Primary survey respondents were between ages 45 to 70. They had either retired within the last decade or plan to retire in the next 10 years.
Of note, 95% of couples said they trust their partner regarding money matters. And 93% shared similar goals for retirement. Still, 24% of couples said they hadn’t come to an agreement on how much money they’ll need for retirement. Nor did they “how much they should spend on children and grandchildren, both today and as part of their estates,” an April release for the survey said.
Marguerita Cheng, CEO and founder of Blue Ocean Global Wealth, said that a common point of contention among couples is when they should give money to children or other family members as part of an inheritance.
“Sometimes, they might disagree about whether they should give money while they are alive, or do they wait,” she said.
Couples Need to Plan for the Financial Burden of Long-Term Care
“Another place where I’ve seen people disagree — and it might harm the surviving spouse — is over long-term care expenses,” Cheng added.
“Sometimes the surviving spouse is harmed because a couple might only be able to withstand one long-term care event. But we have to remember the surviving spouse may be living with less income, as a result of there only being one Social Security check,” she explained.
While Cheng doesn’t believe everyone necessarily needs long-term care insurance, she said that “everyone needs a plan for how they would get long-term care,” if or when that time arises.
“Do you want it at home? Is that house appropriate and safe for you to age in place? And who do you want to provide [that care]? If you want it to be your kid, you might want to have a talk with them. You’re making assumptions that they want to or can. If you take someone out of the workforce prematurely, that is affecting their retirement plan,” she explained.
In some instances, children might decide to pool their resources to pay for their parent’s long-term care insurance, Cheng added.
It's important to hash out the details beforehand.
Estate Planning
According to Ameriprise’s survey, delayed decisions about financial planning are a commonplace issue for couples.
More than half (52%) of couples who participated in the survey said they hadn’t put an estate plan in place.
Furthermore, 41% of couples said they did not have a financial plan, while 39% said they hadn’t determined how they’d recreate their paycheck in their retirement years. Additionally, 72% of couples were providing some level of financial support to adult family members. However, 14% said they weren’t on the same page regarding the amount they give family.
Advisors working with couples who are nearing, or are in, retirement must also remember they are there to help the couple, as well as the individual, Cheng said.
“If someone is more comfortable taking on investment risk, don’t force that person to invest so conservatively that they don’t take any risk. Don’t take either individual too far out of their comfort zone,” she shared.
“It’s important to come into this as a planner, and to listen to the clients’ concerns and their goals. And make sure that you’re incorporating them both in the plan,” Cheng added. “I ask the question: ‘How are you hoping a financial planner can help you individually and as a couple?’”
How Hidden Assets Affect Couples' Financial Standing
The Ameriprise survey also revealed that one in seven respondents had an account they kept secret from their spouse or partner.
Among those who admitted to hiding assets, more than half (51%) said the amount kept secret from their partner was more than $10,000. And 24% of these respondents said the amount hidden was $50,000 or more.
“Couples who are delaying important conversations or who are unable to communicate openly about money tend to have more difficulty planning for the future together,” said Marcy Keckler, senior vice president of financial advice strategy at Ameriprise, in a statement in the release. "Thankfully, there is a lot they can learn from other couples who’ve navigated the path to retirement smoothly.”
Hidden Debt May Be a Reason for Secrecy
Dawn Mabery Chestnut, CEO of Mabery Consulting, said she has seen instances where individuals don’t want to share information about all of their assets with a partner.
“Usually I see it around debt,” she said. “They are hiding debt that they have.”
She recalled one particular instance in which one spouse approached her separately about working on a financial issue, even though she’d already begun working with the couple.
“One of the spouses came to me and it was not a coordinated arrangement with both spouses. Just one spouse came to me and wanted a contract and wanted to work out this issue. It is a very awkward position. But one of the recommendations I gave to that individual was to bring [their] spouse in on what’s going on,” Mabery Chestnut said.
“As a couple, you’re a pot of money. The money is coming from the same pot to pay this [debt],” she added.
“Some of that money that’s coming in can be used potentially to pay down or pay off this debt. Do not continue to hide this from your spouse,” Mabery Chestnut said. She added that she’s also seen instances of hidden accounts with adult children (typically debt they don’t want to inform their parents of).
Reasons for Hiding Assets in a Partnership
Cheng noted that “it’s important to be transparent,” about money in a partnership.
She said that the reasons people hide assets from their partner can run the gamut. Sometimes individuals have married later in life and have blended families, or they hide assets to compensate for their partner’s spending. In other instances, people have the aim of setting money aside for a rainy day fund, in case of an emergency, Cheng noted.
“There could be something very traumatic that happened to them, and they are hiding assets because they want to be prepared. They don’t want to be caught off guard. They want to protect themselves; it’s their survival instinct. I try to give people the benefit of the doubt,” she explained.
In either event, Cheng said that transparency is crucial, especially as certain assets can be designated by ownership.
“When I do financial planning, I can designate the assets by ownership … [for instance], this is your asset, this is in your name. Being transparent is important because it can be included in a financial plan where this is designated as your money,” she noted.
“It is certainly OK for people to have their individual accounts,” Cheng continued. “You don’t have to have everything joint, especially as people are getting married later in life.”
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