gray divorce doesn’t rain down enough financial stress
on a retirement plan, a second (or third) marriage or
domestic partnership certainly will. What to do?
into a new committed relationship means both partners
need to take stock of their retirement plans and legal
documents, having detailed conversations not only about
how to split monthly expenses, but how to plan for
future health care needs, how heirs will factor into the
estate and how aggressively they’ll need to invest to
stay ahead of inflation.
a just-released book — "How Much Can I Spend in
Retirement?" — veteran retirement income
researcher Wade Pfau, a professor at the American
College of Financial Services, cautions against relying
too heavily on the assumption that a household’s
spending will go down as old age approaches.
a J.P. Morgan Asset Management study of 613,000
households headed by people 55 and older that found big
differences in spending patterns, Pfau urges retirees to
consider whether they may be heading for a high-spending
the study, 39 percent of households were categorized as
relatively frugal, while 29 percent spent pretty freely
on pricey homes, 5 percent traveled extensively, 4
percent had high health care bills and the rest had
unique spending preferences that couldn’t be lumped
into a category.
about it: If you spent decades never daring to touch the
minibar while traveling for work, how will it feel to
check into a hotel in retirement and have your new
partner ordering room service and a movie? If your 401k
is flush enough to not need too much stock exposure, how
will it feel to increase the volatility to make up for a
partner’s skimpier account?
book discusses some strategies for all retirees, not
just the newly hitched, to deal with fluctuations in
spending and in investment returns, and also getting to
a fundamental understanding about how to blend more than
a century’s worth of money habits (assuming you’re
both older than 50) is no easy feat.
all about the conversation," says Janis Cowhey, an
attorney and co-leader of the Modern Family & LGBT
Services practice at accounting firm Marcum LLP. Just as
millennials are perhaps more comfortable talking about
money and inheritance issues than previous generations,
she says, couples need to talk more freely with each
advice: Certainly, get a prenuptial agreement if at all
possible for a second marriage, or a similar legal
document if you are unmarried but living together. If
for some reason that isn’t possible or warranted,
having updated wills or trusts is a good second option.
At the very least, consider life insurance policies that
could take care of children from previous marriages when
you die and your new spouse inherits most of the estate.
the timing of any second marriage as well, Cowhey
suggests. While a couple is still unmarried, for
example, they can sell assets to each other to avoid
wash-sale rules on capital gains. Or someone planning to
adopt a fiance’s children may consider doing so before
the wedding to take advantage of the adoption tax
remember to talk about debt, she says, which has been a
big factor for retirees in recent years. Young couples
who start planning a life together might have decades to
bail one partner out of a debt hole, but older couples
don’t have the luxury of time or rising income.
retirees trying to avoid these conversations to keep
peace in a blended family should be aware how
devastating the silence can be for their families after
death, she says.
took on an estate where the father was remarried for
more than 20 years so he trusted her to take care of all
the kids and he left her everything. Once he died within
a few years she had transferred everything into accounts
with just her name and her own daughter’s name. The
client’s kids had had a good relationship with her,
until this happened, of course. And it happens more
often than people realize."