Make a Financial Plan comments

By Wendy Mihm | February 1, 2011

A Plane Bound for Nowhere

Imagine for a moment that you and your spouse knew you wanted to go on vacation.  You would reasonably expect to travel safely to and from your destination, and to have a good time.  But would the two of you ever just get on a plane – any plane – if you didn’t know where the plane was going?  Would you get on the plane if you didn’t know if it was going to a big city or a tropical island?  Ski slopes or a quaint village?

The whole concept would probably feel extremely uncomfortable, and I doubt you would ever do such a foolish thing.

But every day, households across America do this very same thing with regard to their financial future.

Think about it.

If you don’t have a plan, a specific vision for where your retirement investments are taking you, are you not just getting on plane bound for an unknown financial destination?

Envision your Retirement

My objective in this article is to motivate you to talk with your spouse about what the two of you envision for your financial future – specifically your retirement – and then move from a discussion to a more crystallized, shared goal.

I know your days are crazy.  I totally empathize.  But if you have time to decide which plane you’re going to get on for your next family vacation, I argue that you can make time to decide on your retirement destination.  Because if you don’t, you’re essentially on a plane to nowhere.  Ok, I’ll stop yammering atop my soapbox and get on with it.

Here’s what compelled me to write this article.  One of the finance books I read as part of my research for this website is called “Smart Couples Finish Rich.”  It’s a good one for couples and I recommend it if you are into reading financial planning books.  It gives a bunch of examples of couples that did a great job of planning for retirement, and contrasts them to couples that did no planning at all.  The latter sets of couples are all are facing retirement with very little in their accounts and no time to address the problem. 

In one instance, there is a couple that has a fair amount in their retirement account, but they have not communicated at all.  Somehow, they arrive at a financial planner’s office, both in their retirement years, with entirely different visions of how to spend the money they’ve spent the last 40 years socking away.  They have not just talked to each other about how they would like to retire.  Seems like they might have found the time over the course of the past 40 years.  It just struck me as crazy and worth addressing, both in my own financial household and yours.

So now is the time to make a financial plan, and have a conversation about what your retirement will look like.  Here are some questions to get the conversation rolling.

Discuss Retirement With Your Spouse

  • Where should we retire?
  • Do we want to be near the kids and the grandkids?
  • In a big city?
  • In the country?
  • In a college town?
  • In more than one location?
  • Do we want to travel?
  • Do we want to have a smaller house so we can travel more and not worry about the house, or a big house so we can stay home and have our families and grandchildren visit a lot?
  • What about long term care insurance in case one or both of us needs extensive medical care?
  • When do we want to retire?
  • How much money do we need?
  • Are we on track to have that much?
  • Will we have a pension do draw on?
  • Will our house be paid off by then?
  • Will our kids be out of college?
  • Will we want to pursue hobbies or classes?
  • Will we want to buy any big ticket items like a boat or a piece of property?

These are all things you and your spouse should discuss now and try to come to agreement on.  Look how big these topics are!  It may take more than one conversation.  In fact, it may take a few years for some of these concepts to gel.  The truth is, you may even change your mind over time.  But if you keep the conversation going, you can change your minds together. 

The key is to have a shared vision and get your finances behind it.  So get some agreement between the two of you about a number to aim for in your retirement accounts, and then make a plan to go after it aggressively.  Max out your 401k plans.  Start a traditional or Roth IRA.  See our article called Get Started Investing for ideas on that topic.

Now if you have a shared vision and a shared plan to get you there, you can avoid finding out at age 65, in some financial planner’s office, that one of you assumed you’d plop down right next to the grandkids, while the other has always dreamed of a cabin in Costa Rica.  Awkward!


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