Family matters: How do spouses agree on when to retire?
Knowing you have the finances to support your retirement lifestyle is one thing. Putting an exact date on the calendar is vastly different, particularly when it involves getting two people to agree.
For so many people, the thought of retirement is enticing. So much possibility. And then you start doing the numbers and the reality of switching off salaries and living off your Superannuation (and possibly pension or investments) makes it a daunting proposition. No more monthly or fortnightly paycheck.
That security blanket will be gone, and that means those numbers – how much you spend each year, what expenses you’ll have, the lifestyle you want, having money to cover unforeseen events – take on weighty significance.
For couples, there’s an extra dimension. There are two lives to support. While one partner may be content to live relatively simply to enable earlier retirement, the other person in the equation might feel more secure working longer and having as much money as possible squirrelled away for security, or perhaps to maintain the current lifestyle.
What is more valuable? The security, a high standard of living, or enjoying your post-working years sooner? Whatever the source of tension is, those numbers can lead to fundamental disagreement over one of life’s biggest decisions: when to retire.
Here’s a real example, we’ll call them Derek and Amelia (not their real names). The big R was looming, and it was becoming a more frequent topic of conversation. He was fed up with work and wanted to retire early. On the other hand, Amelia wasn’t so sure they could support their current lifestyle without a complete restructure of their finances.
There were worries about having to live more frugally than expected if they got their sums wrong or if there was an unexpected health problem. There was also the issue of life expectancy, not exactly dinner-table conversation, but it was unavoidable, and they both wanted to be sure that if one partner died, the other had enough money to care for themselves for years to come.
Their concerns accord with what we know about retirement. It’s as much an emotional journey as it is a financial planning exercise. We also know that people who feel more in control of their retirement decisions have more positive experiences during their golden years. The opposite is generally true for people who compromise or are forced into decisions.
Planning long term cashflow in retirement is complex, even if it was possible to remove the emotional dimension. Consider this: the Federal Government’s Retirement Income Review found: “Many people misunderstand the purpose of superannuation, believing that in retirement they should only draw on the return from the investment of their retirement savings and not touch the capital amount.”
So how do you find a solution that dignifies each person’s wants and needs, as well as addresses the underlying ambiguity and confusion around retirement planning?
For Derek and Amelia, the answer came from professional support via a third party. A party that was objective – not trying to sell them financial advice or a product – and whose methods were underpinned with solid mathematical models that consider all the key variables associated with retirement.
Through Jubilacion, Derek and Amelia got answers to even the most specific of questions, such as, would getting a part-time job let us maintain a luxury lifestyle for longer? Or, what is an affordable lifestyle if we retire now versus in three or seven year’s time? What if we consciously spend more in the first 15 years and then less later?
Jubilacion’s financial calculator considers these scenarios, potential risks and calculates an annual safe spending amount – for life. A concrete number that empowers people to take charge of their retirement decision making. For couples, it can take the tension out of the debate because, well, maths doesn’t have feelings. It provides outcomes that couples can build their future upon.