Data & Research April 18, 2007
Mars and Venus Disconnect on Retirement Planning
Many married couples are not in agreement when it comes to retirement plans - 22% of couples don’t even agree on whether or not they use the services of a financial adviser.
Reported by Alison Cooke
Nearly one-third of married Baby Boomer and older pre-retiree couples do not agree when asked when they will retire, their expected lifestyle in retirement, and whether they intend to continue working in retirement, according to a recent Fidelity Investments survey. Although most couples agree they will rely most on workplace savings plans, pensions and Social Security in retirement for income, only 39% of them agreed on which source would be primary.
Further, the survey of 502 couples found that only 23% reported joint involvement with their finances. Perhaps intuitively, the couples who are jointly involved in finances are more prepared for the unexpected in retirement and more optimistic about their expected lifestyle once in retirement, while of those who do not partner in financial decision-making, 62% are unprepared for the unexpected in retirement, lacking elements such as life and long-term care insurance and established wills and estate plans.
“It was surprising to us that given how close many of these couples are to retirement, they had yet to sit down to discuss and agree on basic retirement goals, aspirations and income sources with each other,’ said Steven P. Akin, president of Fidelity Personal Investments, in a news release about the survey. “That’s why creating a retirement plan is so critical. It helps husbands and wives address those tough, but basic planning questions that can dramatically alter a couple’s retirement savings strategy.’
Product Knowledge
Overall, 23% of couples surveyed have yet to take action either in planning or purchasing products such as long-term care insurance to compensate for concerns in regard to retirement, which include health care, inflation cutting into savings, and reduced Social Security insurance.
When Fidelity asked the couples about the types of retirement investment products they own, a majority of couples showed agreement on questions about their combined workplace plans, bank accounts and IRAs but there was less understanding of annuities, brokerage accounts and pensions. Among couples who own annuities, only about half of both husbands and wives reported knowing when they could draw income from their annuities, and less than one-quarter of couples understood the actual dollar amount that would be generated by their annuity once in retirement.
Nearly 70% of both husbands and wives knew at what age they can draw from their own pensions, but 60% of men indicated they knew when they could draw from their spouse’s pension and 37% of women reported knowing when they can draw income from their husband’s retirement savings.
Ninety percent of couples agreed on whether they had life insurance policies but 40% did not agree on the coverage amount within those policies. Also, when discussing Social Security, women were more familiar than men on how much income a surviving spouse could expect to receive when the first spouse passes away.
The Fidelity Investments Couples Retirement Research Study included a sample of 502 married couples age 43 to 70 with household income of at least $75,000 or investable assets of $100,000 or more.