According to Fidelity’s new 2021 Couples & Money study, while 57% of respondents say they are joint decision makers on retirement and other long-term financial goals, more than half of all non-retired couples disagree on how much savings is needed to reach their retirement objectives.
And yet, one in five (22%) women report having little or no involvement in retirement planning. What’s more, 40% of those with a same-sex partner report having only one primary retirement decision-maker, compared to only 27% of those with an opposite-sex partner. The solution is clear, Boston-based Fidelity says: make money a team sport.
The study, which has been conducted since 2007 and is unique in testing agreement between married couples on communication and knowledge of finances, uncovered some interesting news: even though seven in 10 (71%) of partners say they communicate at least very well with their other half—and about one in four claim to do so exceptionally well—almost four in 10 (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 nearly one in five (18%) identify money as their greatest relationship challenge, suggesting for many couples, a bit more practice is necessary before they go for the gold when it comes to financial bliss.
“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, even if the conversations do occasionally end in disagreement,” said Stacey Watson, senior vice president of Life Event Planning at Fidelity. “Openly discussing financial matters helps people feel more confident, more closely aligned, and better equipped to take on the future. 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.”
Getting over the finish line
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. Of note, however: nearly half (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, most respondents not yet retired (52%) 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. 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 (after tax) 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 six in 10 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.
Be a team player
For many financial matters, the study found people tend to have a higher opinion of their own abilities than that of their partner.
Still, most respondents generally have about as much confidence in their partner’s ability to assume full financial control of the finances as they do their own, an important factor when considering the differing life expectancy of many couples.
For day-to-day finances and short-term goals, almost half of respondents have complete confidence in the ability of either themselves or their spouse to take over decision-making responsibilities. There is far less confidence, however, in taking full control of retirement finances and strategy, with only four in 10 feeling completely confident in their partner’s ability to do so—or even their own.
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 primary 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 savvier. 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,” said 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.”
The 2021 Fidelity Investments Couples & Money Study analyzes retirement and financial expectations and preparedness among 1,713 couples (3,426 individuals). Respondents were required to be at least 25 years old, married or in a long-term committed relationship and living with their respective partner, and have a minimum household income of $75,000 or at least $100,000 in investable assets.
SEE ALSO:
- 401k Balances Hit Record Levels Again: Fidelity
- 6 Retirement Rules of Thumb Most Americans Get Wrong: Slideshow
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
