Here’s one love-related question you might not have pondered: Are you on the same page about your … portfolios?
After all, once you hitch your life to someone else’s, you’re working toward joint financial goals and building the life you want to live together, whether you want to buy property, save for retirement, have a little bundle of joy … or all three.
And each of you may come into the relationship with different values, approaches and risk tolerances. So figuring out how to make investing work for you both can be complicated.
Below, three couples explain how they’ve made their respective investment styles fit their lives. Then, Katie Brewer, a CFP® with LearnVest Planning Services, shares how couples in similar situations can help set themselves up for success.
Brandon Sutherland*, 32, a software developer, and his wife, Jill, 32, an optometrist, live in Newbury, Vt.
Brandon Says: Jill and I pay a mortgage on our house, have about 18 years’ worth of essential expenses saved, no consumer debt and retirement accounts. Although Jill has about $30,000 of student loan debt.
We keep most of our money separate, which has worked for us for over ten years. We provide an equal amount to our joint expenses, but everything left over remains with the person who earned it.
As far as investing for retirement, I max out all tax-advantaged accounts available to me: a Supplemental Retirement Account, an HSA and a 403(b) with an employer match, then invest everything that’s left over, after expenses, into a taxable account at Vanguard.
Aside from that, I primarily invest in low-cost index funds. My portfolio is roughly 75% U.S. stocks, 10% international stocks, 10% REITs and 5% Cash. Jill has a 401(k) invested entirely in a singular low-cost John Hancock S&P 500 index fund.
I’m saving aggressively (over 70% of my income) to build up enough money so that I don’t have to work a normal job again if I don’t want to—I even blog about my quest for financial independence at madfientist.com.
Based on a conservative estimate of our projected future expenses after I stop working, I’m aiming to secure 300 months’ (25 years’) worth of savings. All told, we currently spend about $2,200 per month. I follow the 4% rule, and based on my current expenses, as long as I have over $300,000, I’ll feel comfortable covering my half of essential expenses for the rest of my life. I have side income from my work as a software developer (I’ve designed a few apps) that should be able to cover discretionary costs.
Jill is saving to be able to work less (6 to 9 months per year), but wants to continue working for the foreseeable future. She plans on working as a ‘locum’ optometrist (an optometrist who travels around filling in at practices) and will be able to set her own schedule.
After a bad experience with a financial adviser in my twenties, I now handle all my investing myself. I tend to take a hands-off approach to managing my portfolio and invest primarily in passive index funds. As I’m mostly in equities and more focused on the tax part of things, I don’t rebalance every year.
I do plan on getting into bonds in the future and will look into rebalancing annually at that point. I focus on the things that are within my control (e.g., taxes, fees, etc.) and try to add as much to my balances as possible. I also plan on doing a Roth IRA conversion ladder during early retirement so I can get that money if I need to.
We’ll be selling our house (and most of our belongings) in Vermont this year and heading to Florida, where we plan on establishing residency because there’s no state income tax. We’ll then head to Scotland, where we plan on renting a furnished place from a family member in Glasgow to make our expenses more predictable while having the flexibility to move quickly and spend long periods of time abroad.
I’ve gotten quite good at using miles, points, credit cards, elite status and loyalty programs when traveling over the last five years, so we already have close to one million miles/points. Once we’re settled in Glasgow, we plan on using miles to travel to Southeast Asia. We’ll take our time getting there, with stopovers to explore Tel Aviv, Amman, Abu Dhabi, Muscat, Doha, Kathmandu, Hong Kong and Bangkok. Travel hacking has allowed us to travel the world cheaply and comfortably in the past, and we plan to continue to do this in our future travels.
The CFP® Says: “If you’re in a position where you want to save up enough to work less (or not at all), the more familiar you are with your budget and fixed expenses, the more accurately you’ll be able to predict whether it’s achievable to stop working a normal job. For couples who keep their money separate, I applaud finding a method that works for you, but I would encourage you to sync on your long-term goals, like retirement, to make sure you are both on track and no one gets left behind.”
*Name has been changed.