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How Couples Delude Themselves About Retirement

A Fidelity survey finds a disconnect between what spouses say and reality

Couples think they’re on the same page about planning for retirement. The truth is, however, they’re often not even reading the same book.

And they’d help themselves by talking and planning more together.

Those are some of my takeaways from the new Fidelity Investments 2015 Couples Retirement Study.

The Disconnect on Retirement Planning

When Fidelity surveyed 1,051 couples online (minimum household income: $75,000; minimum investable assets: $100,000), it found that 72 percent felt they communicate with each other exceptionally or very well. But when Fidelity dug deeper, the financial services firm learned the pairs had wildly different ideas about their retirement prospects and had huge knowledge gaps on key financial matters.

47 percent of couples disagree on how much they need to save to maintain their current lifestyle in retirement.

“There was a real disconnect between what they say and the reality,” said John Sweeney, Fidelity Executive Vice President of Retirement and Investing Strategies.

If husbands and wives or partners talked more specifically about where they are financially for retirement and where they want to be and if they did more dollars-and-cents planning, they’d have a better shot of retiring happily, Sweeney told me. (Fidelity has a handy quiz, A Couple’s Guide to Talking About Savings & Retirement, that could help you and your spouse get a discussion started.)

Where Couples Don’t See Eye-to-Eye

A few examples of the disconnect among couples — especially boomer couples nearing retirement — from the latest version of Fidelity’s biennial survey:

47 percent of couples disagree on how much they need to save to maintain their current lifestyle in retirement. Sweeney says they’d avoid this problem by drawing up a retirement plan. “A lack of a plan creates a lack of communication,” he says. “If you don’t know how much you have and what you’ll need, the level of disconnect will likely be high.”

As it turns out, most retirees today are pretty happy with their lifestyle, according to another new survey: The Retirement Saving & Spending Study from T. Rowe Price.

Of the 1,027 people T. Rowe Price polled who’d retired in the past five years and have a Rollover IRA or a 401(k) balance, 46 percent said they are “living about as well” as they did when they were working and another 34 percent are “living comfortably” but less well than when they were working. Another 12 percent said they’re now “living better” than before. But 8 percent said they are “struggling to make ends meet.”

That said, 57 percent of boomers T. Rowe Price surveyed said they expect they’ll have to reduce their standard of living in retirement.

Only 21 percent of couples (and 20 percent of boomers) Fidelity surveyed said they have developed a detailed retirement income plan to help ensure they don’t outlive their savings. And couples cited outliving their savings as one of their top two “unexpected financial concerns in retirement,” just behind Unexpected health costs.

Here, though, I think the word “detailed” may be a reason for the low percentage. “People in their 60s start to do details; people in their 50s say ‘Give me a ballpark plan,’” said Sweeney.

Incidentally, it’s possible — though I wouldn’t say probable — that retirement health cost fears are overblown. In T. Rowe Price’s survey, 66 percent of retirees said they have enough money to pay for health care.

33 percent of couples Fidelity surveyed disagree about how comfortable their expected lifestyle will be in retirement. One bit of comforting news here: 38 percent of couples disagreed about this in Fidelity’s 2013 survey. So perhaps couples are doing a little better job than previously talking with each other about retirement.

And 60 percent of couples (49 percent of boomers) told Fidelity they have no idea how much their Social Security benefit might be worth. This is not only a big mistake, but something easily correctable since you can get an estimate on the Social Security Administration’s website.

“To me, this indicated that if people don’t know that this basic fact is readily available, they probably don’t have a good sense of what they will need to maintain their lifestyle in retirement,” said Sweeney. “And that’s a goal most boomers describe for retirement: maintaining their standard of living.”

Women Getting More Involved

Let me leave you with one cheerful finding from Fidelity’s survey: Women are taking a bigger role in retirement planning than in the past. Fidelity says 22 percent of women surveyed this year said they are the “primary decision maker for retirement savings,” up from just 9 percent in 2011. “That’s a really positive trend,” said Sweeney. In addition, 54 percent of couples — and 52 percent of boomer couples — say they make retirement investment decisions jointly.

But let’s not get too carried away.

I’d like to see the percentage of couples making retirement investment decisions jointly closer to 100 percent. That’s not just to empower women, but because so many of them will outlive their husbands and will need to take the financial reins at some point.


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