If you ask people what creates stress in their lives, money is often at the top of the list. Maybe you can relate.
A study conducted by the American Psychological Association titled “Stress in America: Paying With Our Health” found money was a significant source of stress in the lives of 64 percent of Americans, primarily parents, younger generations, women, and lower-income households. According to the research:
“Significant sources of money-related stress reported by Americans include paying for unexpected expenses (54 percent said very or somewhat significant), paying for essentials (44 percent said very or somewhat significant) and saving for retirement (44 percent said very or somewhat significant).” (1)
This may come as no surprise, but what you may find eye-opening is that a lack of communication usually heightens financial stressors.
Could you avoid some of your current money challenges if you talked about money more? And when it comes to retirement, might you avoid some of the worry you’re experiencing if you opened up and had honest conversations about your family’s financial situation, your financial goals, and your progress on the road to retirement?
Retirement might be something you need to discuss more often with your spouse, and it might be something you need to start talking about with your financial advisor. Perhaps it’s time to look closely at your retirement journey, confront your reality, and have the tough conversations.
Talking about retirement can help you clarify where you stand and where you’re going. Having challenging conversations can help remove unnecessary uncertainty and anxiety from the equation, allowing you to focus on what is necessary to plan and how to move forward.
It’s not just that people are failing to save sufficiently or invest effectively, but people just aren’t talking about it, which, in itself, causes people to fall behind in retirement planning. The Nerdwallet.com researchers pointed out:
“It’s fun to think about what the future may hold – to a point. Three out of four (76 percent) Americans in a relationship where at least one partner is saving for retirement say they’ve discussed general retirement planning issues, such as at what age they want to retire, where they want to live, and what they want to do. But, the conversation seems to trail off when it comes to calculating the specifics.” (2)
In other words, we tend to skim the surface when talking about retirement and never delve deeply enough into the topic to develop an actual plan that will help make retirement a reality.
So we’re dreaming about turning off our alarm clocks for good to spend our days doing what we love on our terms—perhaps in some exotic locale—but too few of us are talking about what it’s really going to take to get there.
Are you familiar with the saying, without a plan, you plan to fail? Dreaming about retirement without talking about it is really a failure to plan. Planning for retirement requires conversations — not shying away from reality, but really diving into the details, hashing out your plan, and committing to it both individually and as a couple.
You have to be willing to delve deeply enough into the topic of retirement to develop an actual plan that will help make retirement a reality. For instance, do you know how much your spouse or partner is setting aside for retirement? Does he or she know how much you’re saving?
NerdWallet.com and the 2016 Retirement Confidence Survey (by Employee Benefit Research Institute) found:
• 21 percent of Americans have no idea how much their spouse/partner has saved for retirement. (2)
• 21 percent of Americans have not told their spouse/partner how much they have saved for retirement. (2)
• 43 percent of Americans don’t consult with their spouse/partner before making trading decisions. (2)
• 52 percent of Americans have not determined how much they need to save to retire comfortably. (3)
America may be the home of the brave, but we’re not very courageous when it comes to talking about finances. Time Magazine recently reported, “Most Americans would rather have a talk about the birds and the bees than any conversation related to finances.” (4) If you’re one of them, and a life goal is retiring comfortably, then you need to reconsider your position.
Americans actually talk about money a lot in general conversation. Think about it. How many times have you talked about tuition, the cost of food or gas, income, interest rates, taxes, the economy, stocks, banking, loans, or a similar topic? People talk about money all the time. However, when the conversation turns to specifics, they often get uncomfortable.
Even if conversations about money trigger discomfort, it’s important for couples to have them. It can help the conversation go smoother if you set some ground rules. For example, you may want to:
• Share a list of discussion points
• Sit together without any distractions, such as smartphones or televisions
• Let each person speak for a specific period of time
• No one should use blaming language or name-calling (focus on ‘I’ statements rather than ‘you’ statements)
• Listen and share your understanding of what’s being said
• If tempers flare, take a break
The goals of the conversation—and it may take several conversations to get into the habit—are to develop a shared vision for retirement and a plan for achieving it.
You’ll need to talk about how much you have saved already and how much you need to save, which may require you to examine spending patterns and identify ways to save. Also, how you want to invest those savings, the sources of income you’ll have during retirement, and when and how you’ll generate income during retirement.
As we’ve established, if you ask people what creates stress in their lives, money is often at the top of the list. Talking about retirement allows you to clarify where you stand and where you’re going. Having conversations helps to remove unnecessary uncertainty and anxiety from the journey to focus on what is necessary to plan and move forward with confidence.
But for many Americans, an important contributing factor in falling behind on retirement planning is that they just aren’t talking about it. Don’t make the same mistake.
You have to be willing to delve deeply enough into the topic of retirement planning to develop a plan that will actually help make your retirement dreams a reality. Just dreaming and chatting about some magical day in the future where you finally get to relax and travel the world isn’t going to cut it.
You’ll need to have real conversations to get on the same page, develop a shared vision for retirement, and create a plan for achieving it.
If discussing money is an issue, then engaging a neutral third party to lead the discussion may help. A good candidate is your financial advisor, particularly if he or she has experience with retirement planning. (4)
Once you have set goals and expectations for retirement, determined how much money will be needed, shared how much money you are saving, learned how much your spouse or partner is saving, and talked about how your savings are invested, you can work with your financial advisor to develop a retirement plan. Remember, having a plan is not enough. You must implement the plan each step of the way to reach your goals! And an advisor can help to hold you accountable and provide you with a sense of security in knowing a professional is looking out for your best interest.
1 http://www.apa.org/news/press/releases/stress/2014/stress-report.pdf
2 https://www.nerdwallet.com/blog/investing/study-couples-keep-retirement-savings-secrets/
3 https://www.ebri.org/pdf/surveys/rcs/2016/RCS_16.FS-3_Preps.pdf
4 http://time.com/money/3892333/couples-money-conversation/
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
