For couples who are married or plan on getting married, retirement isn’t a conversation that comes up very often.
This is especially true for younger couples. However, the important concept of retirement planning is becoming more relevant as the American economy continues to exhibit volatility.
According to a March 2014 study conducted by USA Today and Capital One ShareBuilder, most couples discuss retirement an average of 14 times per year.
One interesting finding from this study was that most of the participants felt they were not saving enough of their annual income toward a decent retirement. This dark reality brings up a few legitimate questions.
Are couples discussing retirement enough? If so, are they discussing the subject to a deep enough extent to gain real results?
Here are a few tips to get you started.
1. Closely monitor expenses and keep records of them.
Winning half the battle toward saving for retirement is achieved by knowing exactly how much money is being spent in your household on a regular basis. A staggering amount of couples actually have a hard time doing this. Tracking all expenses, both small and large is an effective measure to take. Documenting these expenses month-by-month helps give couples a good idea of what will be spent in a whole year. To do this effectively and efficiently I suggest using Mint.com. It tracks all your expenses automatically when you link your credit cards and bank accounts. The company is backed by Intuit, the creators of TurboTax and other widely used financial software, so you know your information is always safe.
2. Limit how much money you spend on non-essentials.
While romantic dinners and movie nights may be exciting and enjoyable, they have their cost. Many couples have these kind of outings often to keep spice in their relationship. However, such endeavors can be expensive over time. Completely eliminating these activities is not a realistic option; but couples can free up more money for their long-term financial goals by reasonably limiting them, or limiting the cost.
3. Utilize automatic deductions.
If you are working for the right employer, you have the option of setting up monthly payments toward a retirement plan offered by your company. It is best to set up an arrangement, which has the payments automatically deducted from your paychecks. That way the money won’t be seen in your net pay.
4. Save in accounts with tax advantages.
Many employers offer retirement savings plans, such as a 401 (k). Employers also will match the monthly contributions of employees who purchase these plans. However, these employer contribution matches have a limit up to a certain amount. When taking advantage of this option, it is cheaper to defer any tax payments until later. This can also be done independent of an employer if you and your spouse are self-employed. One way to do this is to set up a Roth IRA.
5. Increase your saving contributions as your income increases.
Many people contribute the same amount of money to their retirement fund that they started with even after getting a raise or second job. A better way to save for retirement is to increase the contributions to your fund by the same percentage your income increases. Doing so may help couples reach their retirement goals even earlier, which gives them more time to focus on enjoying life and each other.
Retirement is the grand reward for a lifetime of hard work and dedication. When couples are saving toward their retirement plans together, it increases the likelihood of succeeding. There are many ways for couples to responsibly prepare for the most eventful and leisurely part of life. If you need extra help exploring your options, don’t hesitate in hiring a financial planner.