Financial planning should be team sport for couples

BUSINESS WIRE-More than half of all nonretired couples disagree on how much savings is needed to reach their retirement objectives, and 22% of women report having little or no involvement in retirement planning, according to the 2021 Couples & Money study conducted by financial services company Fidelity Investments.

What's more, 40% of those with same-sex partners report having only one primary retirement decision maker, compared with 27% of those with an opposite-sex partner, according to the study, which has been conducted since 2007 and is unique in testing agreements between married couples on communication and knowledge of finances.

While most partners say they communicate at least very well with their other half, 39% of respondents couldn't correctly identify how much their partner makes for a salary.

Additionally, 44% admit to arguing about money at least occasionally and 18% identify money as their greatest relationship challenge, suggesting for many couples, a bit more practice is necessary before they can approach financial bliss, the study says.

Stacey Watson, senior vice president of Life Event Planning at Fidelity asserts the solution is to make money a team sport.

Watson notes with some optimism that 57% of respondents say they're joint decision makers in regard to retirement and other long-term finances, even though they often disagree on financial goals.

"Money discussions are not always easy, but the fact so many couples feel they are in sync and are comfortable talking about financial topics is encouraging," Watson says.

Openly discussing financial matters helps people feel more confident, more closely aligned, and better equipped to take on the future, she says.

"For all couples, the best advice for money conversations is that it's not a competition, so stick with it and keep the dialogue going," Watson says.

When it comes to commu nicating as a couple, the events of the past year have driven one-third of couples to talk more about both day-to-day and long-term financial planning. Still, some money matters are more difficult than others to discuss, according to the study. The hardest to initiate include discussions around managing debt, will and estate planning, and careers.

As difficult as it may be, there are distinct advantages to keeping the lines of communication open. Sixty-one percent of couples say they discuss their finances at least monthly, a rate that has declined from 65% in 2018.

A critical component of any team sport is having confidence in teammates' abilities to execute what's expected of them. And yet, for many financial matters, people tend to have a higher opinion of their own abilities than that of their partner, Watson says.

As in years past, the study continues to see women sometimes taking a back seat or doubting their abilities for managing longer-term planning and investing. While more women are taking part in planning as either a primaiy or joint decision-maker, women are still far more likely to credit their partners with having a better understanding of investing matters, with 56% of women indicating their partner is sawier. In comparison, only 34% of men say the same.

"The good news is over the last few years-this past year in particular- Fidelity has seen a seismic shift in women seeking out greater knowledge about investing and getting more engaged in planning for longer-term goals," says Watson. 'We know when women do invest, they see positive results that can help reach their goals faster, so building on this and encouraging active participation in household investing decisions can help both partners feel more confident about the future."

Having the ability to retire and enjoy life is mission critical for most couples, and according to the research, many are doing so a bit earlier than expected. Perhaps surprisingly, the average age of retirement among those who have already retired is 60.5 years, while the average expected age for those who had not yet retired is 62.5 years.

However, 48% of all couples interviewed disagree on the actual age they expect to retire.

How exactly to get there continues to be a challenge, and while 77% say they expect to live comfortably in retirement, 52% of respondents not yet retired confess they don't know how much they need to have saved to maintain their current lifestyle once they leave the workforce.

How to afford health care expenses in retirement is by far the biggest concern for all generations, Watson says.

This concern may be justified, because, according to the 2021 Fidelity Retiree Health Care Cost Estimate, on average, a retired opposite-gender couple aged 65 in 2021 may need approximately $300,000 saved to cover health care expenses in retirement.

On the matter of having a vision for their ideal retirement, most say there's no place like home, with 60% of all couples planning to remain in their own state when they retire, a trend that has increased steadily since 2015. During retirement, the top objectives are to spend time with family and friends, followed by relaxing at home and taking it easy. Travel, which had previously been at the top of many couple's retirement list in 2018, fell to the third spot, perhaps influenced by the events of the past year.

The 2021 Fidelity Investments Couples & Money Study analyzes retirement and financial expectations and preparedness among 1,713 couples. The survey was conducted by market research company Ipsos between March 25 and April 22 on behalf of Fidelity Investments.

Respondents were required to be at least 25 years old, married or in a long-term committed relationship, and living with their respective partner. They also were required to have a minimum household income of $75,000 or at least $100,000 in investable assets.