He Said, She Said: Couples Disagree About Retirement, Finances

Summary:
• Most couples ages 45 to 72 say they don’t agree on when they should retire
• Only 45 percent say they decided day-to-day financial matters together
• Disagreement about broad retirement goals slightly higher since downturn
• Couples haven’t “fully digested” effects of financial crisis

Calling Dr. Phil: America’s older married couples need your help.

After decades of working and living together, they can’t agree on basic decisions when it comes to planning for retirement. They may have spent years sharing a bathroom, but they’re bickering about financial decisions. And they’re not talking with each other enough to resolve their disputes.

Husbands and wives on the brink of retirement hardly seem aligned at all. According to a new survey conducted for Fidelity Investments, an overwhelming 82 percent of couples ages 45 to 72 say they don’t agree on when they should retire, whether they should work in retirement or what their lifestyle should be like in their later years.

• Only 38 percent of the 502 couples surveyed reported making decisions together about the investments that will carry them through their retirement years.
• Only 45 percent said they decided day-to-day financial matters together.

Heck, couples even disagreed about facts: whether they owned annuities (39 percent disagreed) or whether they owned an IRA (more than 25 percent disagreed).

The report updates a similar survey that Fidelity conducted in 2007 to examine couples’ expectations about retirement and preparations for it. Jon Skillman, president of Fidelity Investments Life Insurance Co., said the company wanted to see if today’s economic turmoil had an upside in stimulating marital cooperation on the financial front.

It didn’t.

Couples in 2009 still aren’t seeing eye to eye. In fact, the percentage of couples who disagree with each other about broad retirement goals actually rose slightly from the 79 percent reported in 2007. The percentage making retirement investment decisions together remained the same, while the number making joint daily financial decisions rose only slightly from 43 percent.

Lack of communication to blame

“The lack of agreement gets to the heart of the whole issue, which is communication,” Skillman said. “People don’t sit around the table discussing what they want the future to look like in retirement. This may indicate they’re not being realistic or haven’t fully digested the recent reduction in retirement accounts and what that really means for them going forward.”

While poll after poll has reported that boomers say they’ll work longer, the Fidelity survey found that the average expected retirement age rose by only one year from 2007. The husbands surveyed said they expect to postpone retirement until age 64 on average, while wives expect to delay retirement until age 63.

Both sexes may feel certain about when they wish to retire but have other ideas when it comes to their mates. The survey found that 60 percent of the couples surveyed could not agree on either the husband’s or wife’s expected retirement age, up from 56 percent in 2007. Also, 42 percent don’t agree on the kind of lifestyle they’ll share in retirement, up from 37 percent two years ago. In other words, he may want a rustic cabin in the mountains while she envisions a condo in the city.

The study also found that while couples may not be giving each other the silent treatment, they aren’t having conversations about serious financial matters either. “Many told us that they have fewer assets, will need to delay retirement and work longer, and are worried about the impact of inflation and rising health care costs on their retirement savings,” said Kathleen A. Murphy, president for personal investing at Fidelity. “Yet they aren’t talking, planning or managing their finances jointly to address these very important issues.”

Sexes agree ... on worry about the future

Surprisingly, the survey also revealed that only 15 percent of couples surveyed were confident that either spouse could manage retirement finances alone if the other died. In 2007, 21 percent of couples were confident about both spouses’ ability to do so.

Another surprising finding was that more couples in the new survey were concerned about the prospect of inflation cutting into retirement savings—41 percent compared with 28 percent in 2007—but fewer worried about medical bills. This year, 57 percent of couples said they were concerned about unexpected major health care expenses in retirement, compared with 70 percent in 2007. Yet Fidelity estimates that medical costs in retirement will average $240,000 for couples age 65 who retire this year and are covered by Medicare.

The survey, released June 10, questioned married couples with household income of at least $75,000, or with assets of $100,000 or more in investments (excluding primary residences), and with one or both people working. Other findings include:

• 40 percent of couples say one or both spouses will work part-time in retirement.
• 51 percent of husbands and 61 percent of wives called themselves a saver rather than a spender since the market crash.
• 54 percent of wives and 41 percent of husbands say they’re less risk-tolerant now as a result of market turmoil.

“There’s a real call to action here when 39 percent don’t agree on whether they own an annuity,” Skillman said. “That’s less about disagreeing and more about not being informed.

“It’s time for people to take stock again of where they are with their retirement account balances, expectations on Social Security and other fixed-income sources. Make sure to have a plan within five to six years of retirement,” he said. “Agree on objectives, lifestyle, how long you want to work—this will allow you to put a plan together that will allow you to actualize that dream.”

Carole Fleck is a senior editor at the AARP Bulletin.