At the time they were feeling financially stretched: They had two kids and were building a large home when Dan lost his sales job.
Liz’s income as a sales manager kept them afloat, while Dan launched his own business. But they agreed that they needed to scale back if they wanted to boost their savings—and help reach retirement goals, like owning multiple homes and having the flexibility to travel and pursue the occasional side gig in their golden years.
Over the next couple of decades, the Carrolls made strategic decisions to help make this happen: They downsized their home; refused to finance big purchases; invested in rental properties; and devoted one of their incomes to retirement savings, college funds and paying down debt.
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The outcome of their financial discipline?
Liz, 47, and Dan, 50, are almost ready for retirement, rather than stressing over it. They recently moved to a home they'd built on the Oregon coast, while also maintaining a condo in Portland for the nights they still need to be in the city for work.
“For the past eight years [our Oregon coast home] had been a weekend tease, but with both our kids in college now and flexible jobs in sales, we can live there and work remotely most of the time,” says Liz Carroll. “Twenty-five years into our marriage, we are debt-free—and within arm's reach of our retirement-fund goals.”
While the Carrolls were on the same retirement page, it turns out a decent number of couples aren't: A 2015 Fidelity study found that 47% of couples don’t agree on the lifestyle they want in their golden years.
Case in point: Cruising the Caribbean for six months will require a vastly different sum of money than, say, road tripping in an RV during the summer months—which means you and your honey may need to have some serious money conversations in order to make retirement a team effort.
Sound scary? Don’t think of it as a negative thing, says Gary Garrison, a wealth management adviser with Asset Protection Wealth Management in Little Rock, Ark.
“It can be fun dreaming about how you're going to spend your retirement years with your spouse,” says Garrison. “Once you've narrowed down your desires, then you can ease into the nitty-gritty financial decisions that will have to be made."
Since it can be hard to know where to even start, we asked financial pros for their top tips for mapping out your dream retirement as a team.
1. Start With a Visualization Exercise
Nail down some time when you and your spouse can relax—perhaps over a bottle of wine—to ask each other questions like, “In a perfect retirement, if you woke up and looked outside the window, what would you see?” suggests Syble Solomon, a financial behaviorist and creator of Money Habitudes, a game-like set of cards that helps facilitate money conversations.
“You will quickly get some insights if one person sees the current backyard, and the other sees the ocean or their daughter's house a 1,000 miles away,” Solomon says, adding that this conversation should be designated as a judgment-free zone.
For Tiffany, 25, and her husband John Mason, 24, an Army officer, the visualization was less about where they would live and more about how they would live. Their key questions were “What does financial independence look like to you?” and “How will we know when we are financially independent?”
“We are both passionate about having the freedom to work when we want to—we don't want to be part of the rat race,” says Tiffany Mason, a life coach based in West Point, N.Y. “We'll know that we have retired when we're able to wake up one day and not have to work [out of financial obligation].”
Another strategy Solomon recommends: Look at the lives of already retired family and friends. “Talk about what they did that impressed you, surprised you, and could work for you—or whether their example raises issues that you would want to avoid,” Solomon suggests.
2. Pinpoint How Exactly Your Dreams Differ
Ok, so what do you do if you aren’t exactly on the same dream retirement page?
Garrison advises couples to break down their retirement needs and wants by using what he calls the "stop light" method.
This involves taking each goal you’ve discussed—say, which part of the country you want to live in, and at what age you want to start winding down—and color-coding them based on how strongly you feel about them.
Green goals are the ones you can take or leave; yellow goals are important to you, but you’re willing to negotiate them; and red goals are the ones you really don't want to budge on.
"I remind couples to talk about the best ways to stay within their means. This may require tough love once you see what the numbers mean based on your choices.”
“Once you’ve checked off the green-colored goals you have in common, start to tackle the negotiable yellow areas," Garrison says. "And for couples who have one or more red areas, consider that your goals and situation may evolve as time goes on—but that you also may need to engage a third party for help."
That’s a tack the Carrolls took when they would come to an impasse. “When we disagreed over goals, we employed a third party to mediate, like a marriage counselor,” Liz Carroll says. “My husband tends to be more of a risk taker on investments, but having a neutral party to help us align our goals has been helpful.”
This would also be a good time to consider working with a financial professional, who can help you come to a happy medium while planning your dream retirement goals—both on a personal satisfaction and hard money facts front.
3. Set Budget Ground Rules to Help Meet Your Goals
Once you have a ballpark retirement vision in mind, delve into the details or what you need to do to shape your budget now to help ensure you can live the retired life you want later.
The Masons, for instance, decided that they wanted to get to a point where they could live off their investments and other passive income—by age 30.
To reach that goal, they knew that they'd have to implement some serious saving and cost-cutting measures, like saving 30% of their income, biking to work and diligently shaving their budget to just the essentials.
“John checks our budget daily, and we constantly talk about staying on track,” Tiffany Mason says. “Because we are on the same page and working toward a common goal, talking about finances is something that we both enjoy.”
The Carrolls, meanwhile, have a rule that neither of them can spend more than $200 without consulting the other. They also decided to invest close to half of their joint take-home pay for such future goals as retirement.
These are the types of lifestyle choices that will require a lot of cooperative decision making—and communication. “I remind couples to talk about the best ways they can stay within their financial means," Garrison says. "This may require a little tough love once you see what the real numbers mean based on your choices.”
4. Review Age-Based Guidelines Together
You and your partner may be a long way off from your 60s, so it might help to break down some big-picture, age-based financial to-dos by decade to keep you motivated on your path to retirement.
In your 20s—and, really, at any age—it’s all about saving, saving, saving, says Solomon.
Starting this process early in your 20s offers a particular advantage, thanks to compound growth, so consider opting into a company-sponsored 401(k) as soon as possible, or if you don’t have access to one, consider stashing money in a Traditional or Roth IRA.
“Many retirees regret not putting money into a 401(k) earlier in life,” says Roger Cowen, a financial consultant and founder of Cowen Tax Advisory Group near Hartford, Conn. “So aim to start saving about 10% of your gross income [as early as possible].”
In your 30s, focus on paying down your college loans and conquering any credit card debt, Cowen suggests, so that you can free up money for future goals.
Also, since this is the decade when people may begin growing their families, he adds, consider making sure you have adequate life and homeowner's insurance to protect your loved ones and your assets. You may also need to reassess whether your family's health care coverage is sufficient, as well as look into disability insurance in case you physically can't work.
Bottom line: You wouldn’t want an unexpected disaster—like a debilitating accident or a home fire—to waylay your retirement dreams.
“More seniors are carrying debt into retirement than ever before. So get serious about getting things paid for—your home, vehicles, boat.”
In your 40s, try not to get sidetracked by costs like your children’s tuition or weddings by dipping into your retirement account to fund these goals, Cowen says.
Another important to-do: Take a deep-dive look at your portfolio to see if your progress might warrant readjusting your retirement strategies. For example, instead of retiring at the same time, will you need to stagger your retirement ages in order to continue growing your nest egg?
“When one spouse works longer, the amount of Social Security benefits the couple receives will increase, and he or she will also be adding to the retirement savings,” Cowen says. “There are also health costs to consider—if one spouse works longer, the couple can save money by keeping insurance through an employer.”
Or perhaps it’s your retirement dream that shifts. “If you want to retire to an idyllic island, but your savings only allow for a condo on the beach for a week every year, you may simply have to enjoy it, as is,” Garrison says. “Or you may have to give up one thing in order to truly enjoy or have another.”
In your 50s, you'll want to begin preparing for the financial transition to retirement, which should include getting rid of any existing debt.
“More seniors today are carrying mortgage debt into retirement than ever before,” Cowen says. “So get serious about getting everything paid for—your home, your vehicles, your boat, etc.”
And if you’re not already working with a financial adviser, it may be a good time to start, so you can get insight on how and when to start drawing down from your retirement savings.
5. Schedule Regular Retirement Check-Ins
Of course, one key to implementing all of these to-dos is to have regular retirement reality checks—as a couple. “You want to discuss how your priorities or situation have changed, and how to tweak your financial plan accordingly,” Garrison says.
He suggests an annual discussion in January, when the stress of the holidays has passed, and you’ve received your year-end statements.
For their part, the Masons make money talks a more regular occurrence—they catch up on their finances nightly as part of a routine they call “Couch and Connect”—a quiet time to reconnect after a busy workday.
“Being on the same page with your spouse about your finances and lifestyle is essential if you want to retire,” Mason says. “It's all about working as a team.”
LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc., that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Unless specifically identified as such, the individuals interviewed or quoted in this piece are neither clients, employees nor affiliates of LearnVest Planning Services, and the views expressed are their own. LearnVest Planning Services and any third parties listed, linked to or otherwise appearing in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.