When you're in your 20s, 30s, and even 40s, retirement can seem like a far-off event -- so much so that you may be inclined to largely put it on the back burner. But that's not a great idea, because the sooner you start planning and saving for retirement, the better your chances of having enough money to do all the things you want to do.
It's also really important to discuss retirement matters with your spouse or romantic partner. And this doesn't mean starting those discussions in your 50s or 60s, when that milestone might be right around the corner.
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Edelman Financial Engines found that not having a similar vision or goal for retirement is a major financial deal-breaker in a relationship for 17% of respondents in a recent survey. You don't want to end up in a situation where your relationship crumbles due to conflicts over retirement. So with that in mind, here are some points to talk about early on.
1. Your desired retirement age
Maybe you're someone who would really like to retire in your 50s. But your spouse or partner could be someone who doesn't feel comfortable retiring until a much later age.
This is the sort of thing you'll ideally want to reconcile early on. That way, you can potentially avoid resentment and perhaps make it so that each of you gets your way.
For example, you may decide that you're going to max out your 401(k) or IRA annually to allow for an earlier retirement. Your partner may be fine with working into their 70s, in which case if they want to save a little less for retirement each year and spend more money on hobbies, that may be a reasonable compromise.
2. Where you'll settle down
The cost of living in some parts of the country can vary tremendously from others. It's a good idea to throw around some ideas of where you think you'll settle down once you're no longer working, and then research the associated costs. Along these lines, it may be a good idea to look at housing in your preferred retirement locale, as that may end up being your largest expense.
Let's say you and your partner are in the process of paying off a $500,000 home you expect to own outright by retirement. It may be that homes in your preferred retirement city cost an average of $750,000. In that case, you'd potentially need to save a lot extra to ensure that you'd be able to buy a new place after wrapping up your careers.
3. What you'll do with your time
It's important to go into retirement with a plan that includes how you intend to spend your days. It may be that you'd like to spend most of your retirement doing things locally, while your partner wants to travel a lot. There's a bit of difference in cost there, so you'll need to loop one another in on your goals.
It's also a good idea to talk about whether you'll work in some capacity. Retirement could be a good time for you and your partner to team up and start a business together. But if one of you is intent on not working, it's better that the other one of you know that ahead of time, in case you're secretly mapping out a marketing plan in your head for the bakery or café you'll operate jointly.
You don't necessarily need to come to a final decision on all things retirement-related with your partner when you both intend to work for another 20 years or longer. Rather, it's a good idea to have general conversations early on, and then firm up plans as retirement gets closer. That way, you'll have plenty of time to reconcile any major differences in goals and opinions that might arise in the context of your senior years.
