July 01, 2018
Every week, Simply Money’s Nathan Bachrach, Ed Finke and Amy Wagner are answering your financial questions in The Cincinnati Enquirer. If you, a friend, or someone in your family has a money issue or problem, please feel free to send those questions to firstname.lastname@example.org
Steve from Blue Ash: I’m 61 and really hadn’t planned on retiring for another five years or so, but pretty soon I'm basically going to be forced into retirement by my employer. What should I be doing to make this a little less stressful?
Answer: Unfortunately, this happens to plenty of pre-retirees. You may have planned to work a lot longer, but unforeseen circumstances have forced you to retire early. In fact, nearly 60 percent of Americans retire earlier than planned, either by choice or by force, according to Voya’s Retire Ready Index™.
First, clearly understand your health benefits. You can potentially request to be on your spouse’s plan, or consider using COBRA as an 18-month bridge. If neither is an option, you could also research a private individual policy. Then, once you reach 65, you’re eligible for Medicare.
Next, look at your budget. Evaluate every single expense and cut non-essentials. If you have credit card debt, now’s the time to consolidate it and/or pay if off. Don’t be tempted to liquidate retirement accounts or borrow against your home equity.
It’s also a good idea to sit down with a trusted financial planner (we recommend a CERTIFIED FINANCIAL PLANNER™ or a Chartered Financial Consultant®) and create a roadmap for your retirement accounts. Your financial planner can help you develop a withdrawal strategy, a Social Security claiming strategy, and a budgeting strategy. If you have stock in a company, a planner can also help you understand your options, and if you’re entitled to a pension, he or she can help you figure out your benefit options (single life, joint with survivor, or a lump sum).
Lastly, make sure you get paid for unused PTO or vacation days. Most companies will pay you for these, so don’t leave without talking with the HR department about this.
The Simply Money Point is that it’s normal to feel some fear when being forced to retire before you think you’re ready. But this could also be the beginning of the kind of life you’ve always wanted. With so many decisions to make – both financial and personal – you’ll almost always benefit from professional advice.
Jennifer and Sam in Independence: We’ve been married for about four years now, but I’m definitely starting to see how completely differently we approach money. He’s a spender, I’m a saver. How can we come to a compromise and merge our views?
Answer: It’s important to understand that you may not be able to change each other’s behavior, but you can modify it with a little communication and compromise.
For starters, if you’ve merged your accounts, this may be a good time to set up individual accounts. This way, each person is responsible for all of their own discretionary spending. However, you should still continue to have a joint account for all your monthly expenses.
Depending on the severity of the situation, one spouse may want to take the lead on splitting your remaining cash. This creates boundaries and structure within your finances by providing a limit on the amount of cash each of you are able to spend at one time.
It’s also important to be as transparent as possible. If one spouse pays all the bills, the other may have no concept of what’s coming in and what’s going out. Make this a team event and pay all of your bills together. This allows each partner to better understand the family expenses. This task may even strengthen your relationship. Apply this thinking to your investment and retirement accounts as well – the both of you should be planning for the future together.
Setting goals together is another way you can be transparent. This could help change your partner’s spending behavior since they have more of a direction to go in, and they better understand the reasoning behind certain financial decisions the both of you are making together. Without goals, they may not see the big picture and spend frivolously.
Here’s The Simply Money Point: The first step in financial compromise is communication. While you may not be able to completely change someone’s spending habits, you can help tweak their spending behavior by helping them see the bigger picture.
Responses are for informational purposes only and individuals should consider whether any general recommendation in these responses are suitable for their particular circumstances based on investment objectives, financial situation and needs. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing, including a tax advisor and/or attorney. Nathan Bachrach and Ed Finke and their team offer financial planning services through Simply Money Advisors, a SEC Registered Investment Advisor. Call (513) 469-7500 or email email@example.com.