Sometimes one spouse wants to save and the other intends to spend. Money is the number one issue that married couples fight about, according to a survey of 1,072 U.S. adults by Ramsey Solutions.
The happiest couples make financial plans together and discuss common goals. Couples in “happy” marriages are much more likely to have discussions about their money dreams (94 percent), compared to 45 percent of couples in OK or crisis relationships, the survey found.
Here’s what you can do if you’re serious about saving and preparing for retirement and your spouse shows no interest or continues to be a spendthrift.
Try an emotional appeal. Consider appealing to the emotions of the non-planning spouse. “Start with trying to change their mind,” says Steve Vernon, author of “Retirement Game-Changers: Strategies for a Healthy, Financially Secure, and Fulfilling Long Life.” The use of personal stories can have a big impact. “Compare people doing well to people doing poorly,” Vernon says. “Do you want to be like Uncle Frank, who is not doing well?”
Vernon says you should pull out all the emotional stops. “I acknowledge you won’t get them to change their mind right away,” Vernon says. “Don’t get discouraged. Sometimes people take three or four times before they change their minds.”
Don’t hesitate to bring up the children. Most parents don’t want to become a burden to their children. “If they are not saving and spending, talk about not only what it means to them, but what it means for your children as well,” says Matthew Helfrich, partner and president of Waldron Private Wealth in Bridgeville, Pennsylvania. “No one wants to hurt their kids. When you start putting in what it means to the kids and grandkids, that’s when it starts to register. It takes a candid conversation and hitting the emotional heartstrings.”
Let the financial planner be the bad guy. Both spouses should visit a financial advisor together and let the professional lay out the situation. “I have them both come in,” says Dave Totah at Exencial Wealth Advisors in Frisco, Texas. “It’s almost like financial counseling.”
However, you want to be careful not to gang up on the non-saving spouse. “What we want to do is call the non-compliant spouse out and show that their behavior is putting them on a less than positive path,” Helfrich says. “You don’t want this to be a session where two are attacking one.” The spouse who is doing the saving and planning might want to meet with the planner in advance to determine the message that will be delivered and how that message will be conveyed.
Contribute to an IRA for a spouse who doesn’t work. If the non-saving spouse does not work, consider opening a spousal IRA on his or her behalf. “The working spouse can put up to $5,500 away for the non-working spouse in a traditional IRA,” says Christine Russell, senior manager of retirement and annuities at TD Ameritrade. You can defer paying income tax on the money you deposit in a traditional IRA, or put the savings in an after-tax Roth IRA, which will have tax-free withdrawals in retirement.
Max out your 401(k) at work. If only one spouse is saving for retirement, it’s especially important to save enough for emergencies and retirement. “If your spouse isn’t saving, or not saving enough, you are in a boat where you are saving for two,” Russell says. “You are saving for the household – you and your partner.” Take care to max out your 401(k) account and put some money aside for unexpected expenses.
Show them the numbers. While some spouses will be persuaded to save by emotional appeals, others might be more motivated to save if you logically run the numbers with them. A financial professional can explain how a lack of saving will impact your finances in retirement. “I have clients and the husband is the saver and the wife is a spender,” Totah says. “What I did is put together a financial plan that showed them income and expenses.” Seeing how excessive spending will impact your retirement lifestyle written up on paper can motivate a change in behavior. “You can see it not just in a year, but 25 and 20 years out,” Totah says. “Little things become much bigger compounding over 20 years.” The strategy worked, Totah says. The couple came up with a budget, which they had never done before.
Compromise. You might have to give a little to get a little in return. “Compromise and give him or her something they want,” Totah says. “Each person has to feel like they are getting what they want. Try to agree to terms of a budget both of you can live with.” For example, if we can save $1,000 a month, you get to spend $200. The ultimate objective is for both members of the couple to end up happy. The saver gets to save, and the spender gets to save and spend a little.
