Before their wedding, every couple needs to look past the love they have for each other and face the reality of how important money is in a relationship. Money can cause stress in both the immediate present and in the distant future. Saving for retirement is incredibly important, and both parties have to be on the same page with the same plan for it to work.
Planning early and treating saving like a bill are the keys to a successful retirement.
Be Honest and Open About Finances Before You Tie the Knot
Money sinks marriages – even marriages that were otherwise strong. Financial problems can be real, persistent and devastating. Avoid surprises by discussing both your current situations and your future plans. Get on the same page as far as your retirement goals, but don’t hold back ugly truths about your credit, savings or income.
Treat Saving as a Bill
No matter what happens, you find a way to pay the rent or mortgage. No matter how tight finances get, you find a way to keep the lights on and pay the heating bill. Look at retirement funding as a bill that must be paid every month no matter what. Resist the urge to view saving for retirement as something you can do in times of plenty and may have to forgo during the lean times.
Don’t Be Frivolous with “Found Money”
As discussed in the article “7 Ways to Boost Savings, Retire Early,” don’t waste money you didn’t expect to have in the first place. When you “find” money – like if you get an unexpected raise or get a better interest rate on a car loan or credit card – resist the temptation to consider it free money and spend it like such. Put it towards retirement – you’ll be glad you did.
Utilize Tax-Exempt Saving Vehicles
Because it benefits both the individual and society at large for people to be self sufficient and independent in retirement, the government offers several incentives for people to save during their earning years. Both you and your spouse should take advantage of employer 401(k)s. If you job doesn’t offer retirement benefits, it is your responsibility to open an individual retirement account, or IRA, which comes with many of the same tax-related benefits.
You’re not single anymore! Be open and honest about your financial situation going into marriage.
Take advantage of tax-free vehicles such as IRAs, keep money you “find” and treat savings like a bill. But most importantly, be open and honest with your soon-to-be spouse about what you have, what you owe, and how you plan to retire. Financial secrets turn into financial surprises, which turn into financial problems. Avoid them before they fester, and live – and retire – happily.
Andrew Lisa is a freelance finance writer who covers retirement planning and budgeting.