First post:Using annuities to reign in a spender?

[qxky27]

Hi there! I'm a longtime lurker who just ER'd a few months ago at age 56. This is my first post here. Would be very interested to hear opinions of something I've been thinking about.

I have always been a saver and DW is a spender. Although she is still working she spends more than she makes, and spends more than twice as much as I do. We split the cost of all things such as house and car expenses, food, pet care and other things that we both make use of. Most of her higher spending is from personal care stuff, "tech toys" and impulse buys. If she has a large savings deficit while working I'm really worried about what will happen when she decides to retire.

I don't believe I can change her spending habits. I'm not asking for advice about that here because I believe it is impossible. My question is, what if, much later in retirement, her spending starts to push us toward the brink? I've been thinking that if resources are dwindling too quickly at some far off future time, it might make sense (as an emergency measure only) to annuitize all remaining savings to have a fixed income to live on along with whatever paltry amount social security will pay. That would in effect put a cap on what she could spend each month. Right now when she spends more than she makes she does not run a credit card balance but just expects that it should come from my non-retirement account savings. I keep telling her that's like robbing Peter to pay Paul. If it were all annuitized there would be no more savings to "borrow" from. I don't believe she would be willing to pay the high credit card interest and would probably not run a balance, she is more like, "if the moneys there it can be spent" so if the money's no longer available in savings she might cut her spending.

Opinions, anyone? Thanks! And I have to add how much I have enjoyed my lurking time on this forum-it's very informative.

 

[travelover]

I hate to say it, but that would be a band aid on a bigger problem. You need to confront the issue, which won't be pretty. But then getting a divorce as you near retirement age isn't either. BTDT

 

[LOL!]

Apparently, this is the recommended solution for athletes, movie stars, rock bands, etc. Will it work with a spouse? Is she a rock star Heisman trophy winner?

 

[REWahoo]

I've been thinking that if resources are dwindling too quickly at some far off future time, it might make sense (as an emergency measure only) to annuitize all remaining savings to have a fixed income to live on along with whatever paltry amount social security will pay. That would in effect put a cap on what she could spend each month..

I see it as not limiting how much she can spend but instead limiting how much you can pay. If you annuitize all your savings you will tie your hands completely when it comes to having any flexibility. I see it as a dangerous move to attempt to solve your problem.

In my experience the only way to handle this is to have some very tough conversations with your DW. If you are worried it will damage your relationship, I'd argue it sounds as if that damage has already been done.
Unless you can get her to live within your means you two aren't destined to remain together - the sexes are generally separated in homeless shelters.

 

[bbbamI]

If you don't already, I suggest keeping a detailed spreadsheet of expenses.

Then, plug your numbers into a financial calculator such as FireCalc and see what your results may be for your future retirement needs.

If she sees in 'black and white', this may enable her to understand the situation more clearly. ...that it is very possible to run out of money. If she wants to spend more money, then she'll have to continue to work to buy her toys.

 

[qxky27]

If you don't already, I suggest keeping a detailed spreadsheet of expenses.

BbbamI, I do have a detailed spreadsheet that I update monthly. One page in it tracks the amount we each spend each bank statement cycle but does not break it down into categories. I've been thinking that I need to start tracking details of exactly what every dime is spent for-something I have put off just because it is so tedious to track every receipt and to account for occasional cash spending.

DW is a tech-capable person and not bad at math. I think she just can't bear the idea of being restricted on what she can do and has self-discipline difficulty. That problem shows up in other aspects of her life too, not just with money.

 

[haha]

She will be cheaper to divorce while she is still working than later. Consider it. You could also go back to work yourself, in some other city, and try to get a legal separation.

Is it a long marriage, or recent?

Ha

 

[Lazarus]

I don't think it will solve your problem. Credit cards will start to look good to her if she can't contain her spending and other sources are cut off.

 

[Texas Proud]

As others have said.... (and I will throw in a political swipe).... it is a spending problem, not a revenue problem....


As long as she is spending at the level she is.... it does not matter what you do on the income side.... I am having a problem getting this across to my DW... she will say "I did extra work to get the money".... I say "that does not change the budget at all"....


She will continue to spend even if you can not pay the bills... she will run up the CCs and expect YOU to figure out how to pay them... (I am not in this boat... my DW is doing a lot better than a few years ago and said she is looking to spend less)....

So, good luck, but try and fix the real problem....

 

[bbbamI]

BbbamI, I do have a detailed spreadsheet that I update monthly. One page in it tracks the amount we each spend each bank statement cycle but does not break it down into categories. I've been thinking that I need to start tracking details of exactly what every dime is spent for-something I have put off just because it is so tedious to track every receipt and to account for occasional cash spending.

DW is a tech-capable person and not bad at math. I think she just can't bear the idea of being restricted on what she can do and has self-discipline difficulty. That problem shows up in other aspects of her life too, not just with money.

Would she consider therapy?

Perhaps both of you could go (that would enable you to understand why she feels this way).

 

[Midpack]

Ouch! The others have covered it.

All I can add is, I think I'll give (my) DW an extra big hug tonight when she comes home. She's equally LBYM driven as I am, thank goodness...

 

[frayne]

A large insurance policy and a hitman comes to mind. Seriously, sit her butt down and show her the math. If she balks, counselling and if that doesn't work consider putting her on waviers. Life is too damn short to be bogged down by a spouse that is clueless when it comes to spending. Just my two cents. Good Luck.

 

[travelover]

My ex-wife was a spender. I finally did a detailed tally and confronted her with it. She was actually shocked to see the totals. She went to therapy (she was spending to make up for low self esteem) and along the way the therapist convinced her that marriage was an anachronism anyway.

Hope you have better luck.

 

[haha]

As the song goes, "The first cut is the kindest".



Ha

 

[qxky27]

Thanks for everyones thought-provoking opinions. A good point about the situation is that DW shows no sign of wanting to retire anytime soon, likes her job and may at times do some extra consulting work. As long as she keeps working her deficit spending is not great enough to cripple us.

I'm thinking: no divorce, probably not therapy at this point (we have had a bit of therapy before-her more than me and together only once) but as soon as she makes any noises about retirement I will begin tracking every penny that we spend. I would like to track it for a year before she retires. I think much of the damage is done by impulse buys if items less than $50. Several times a year I go on overseas jaunts to hike up a few mountains and even with a big plane ticket on my credit card, her cc bill can still be double mine just from stuff she does and buys locally. Also I tend to compensate for unexpected expenses-just last week found out a pet needs some expensive medical tests so I immediately scaled back on plans for a piece of outdoor gear I wanted to get-but she's not usually the same way.

Well I have rambled enough for the moment. Great to have some like-minded people to share some thoughts with.

 

[REWahoo]

Do you work for Congress? You just decided to kick the can down the road...

 

[pb4uski]

Couldn't you accomplish the same result with less pain by just putting her on an allowance? Does she recognize that if she has it she spends it?

Or perhaps hide it from her.

 

[MBAustin]

How about separate bank accounts - his, hers, ours - with an agreed upon amount deposited in the individual accounts each month? You could even make her amount a little higher to soften the blow?

And I would not wait to start tracking the spending at the detailed level - get in the habit now. Both our credit card bank and checking/savings bank provide a basic categorization of expenses on credit/debit cards - you can download into a spreadsheet and sort on that and go from there. I find it about 70% accurate (but part of that is my problem - I buy most of our wine at the grocery store so that inflates "groceries" for example). But it only takes a few minutes a month to make the corrections.

 

[braumeister]

T but as soon as she makes any noises about retirement I will begin tracking every penny that we spend. I would like to track it for a year before she retires.

1. Why wait?

2. Just as a thought experiment, what do you suppose would happen if she lost her job next week?

3. It sounds to me that your unwillingness to have any sort of conversation about what you see as a potentially serious problem is just as dangerous as her out-of-control spending.

 

[azphx1972]

A good point about the situation is that DW shows no sign of wanting to retire anytime soon, likes her job and may at times do some extra consulting work. As long as she keeps working her deficit spending is not great enough to cripple us.

I'm thinking: no divorce, probably not therapy at this point (we have had a bit of therapy before-her more than me and together only once) but as soon as she makes any noises about retirement I will begin tracking every penny that we spend. I would like to track it for a year before she retires. I think much of the damage is done by impulse buys if items less than $50. Several times a year I go on overseas jaunts to hike up a few mountains and even with a big plane ticket on my credit card, her cc bill can still be double mine just from stuff she does and buys locally. Also I tend to compensate for unexpected expenses-just last week found out a pet needs some expensive medical tests so I immediately scaled back on plans for a piece of outdoor gear I wanted to get-but she's not usually the same way.

Wow. Sounds like you're in serious denial. Ignoring the problem or only addressing the symptoms isn't going to make it go away. If anything you're enabling her negative behavior. As difficult as it may be, you have to be strong enough to deal with the issue head on, for the sake of your marriage and your future. Don't wait until it's too late.

 

[rodi]

How about separate bank accounts - his, hers, ours - with an agreed upon amount deposited in the individual accounts each month? You could even make her amount a little higher to soften the blow?

And I would not wait to start tracking the spending at the detailed level - get in the habit now. Both our credit card bank and checking/savings bank provide a basic categorization of expenses on credit/debit cards - you can download into a spreadsheet and sort on that and go from there. I find it about 70% accurate (but part of that is my problem - I buy most of our wine at the grocery store so that inflates "groceries" for example). But it only takes a few minutes a month to make the corrections.

My parents did the his/hers/ours thing. My dad didn't like what my mom spent money on, my mom didn't like what my dad spent money on - this took away the fights. (they both worked and had their own income.)

Perhaps weight how much goes into common bills (housing/groceries) so that it matches the income ratios.

I thought this was normal till I started seeing friends blending their accounts. It took me 2 years of marriage before I was comfortable with joint accounts... largely because I saw friction in married people with different spending attitudes... and wanted to avoid that friction.

I also agree that it's never too early to start tracking spending.

 

[Katsmeow]

I am a spender at heart. I see posts of people who say they can't think of anything else to spend money on and that just....bemuses me. I don't find it hard to find ways to spend money at all.

Back in the day I also had a hard time with not spending more money than I had. For a long time I tracked spending using Microsoft Money but that didn't really help. It's budgeting - like most budgeting programs - was weak and really didn't help me to see that I had to make choices. The pie was only so big and if I took 3/4 of the pie from this side....I couldn't take 1/2 the pie from the other.

One thing that did help was I found a program called You need a budget.

Personal Budget Software - Finance Software for Windows & Mac

It really helped me with budgeting.

One thing that has helped me a lot is that I created a spending category for me and one for DH. We allocate a generous amount to it. That is the category that I have to buy my computer and my iPad and electronic toys from. I also have to buy books (I buy lots of books) from it and anything that is kind of a fun item for me or something that exceeds the budget category for something else (for example, DH overdrew his clothing budget for 2012 in December and took the extra $135 from his spending money).

I like buying high end computers so I like to "save" my spending category money so I can buy something like the $3k notebook that I took delivery of today. I'm happy with it and DH is fine with it because he doesn't care how I spend my spending money and vice versa. And it doesn't blow the budget because I stayed within my spending money budget.

This lessens any possibly of conflict. I don't ask DH to give me his spending money as that would be unfair to him. Neither one of us gets irritated at what the other spends since we stay within our spending budget and what you spend it on really doesn't matter.

The other way of budgeting is to take savings off the top and make that basically inviolate and then it doesn't really matter how you spend what is left so long as you don't go into debt. Some people have a lot of trouble not spending money that is sitting right there in your regular bank, but if you take the same money and automatically save it or invest it somewhere else then it is out of sight, out of mind and it stays saved....

 

[MichaelB]

If she spends without regard to budget or income, she will continue to do so after she stops working and even if all the income is in an annuity, racking up CC debt. This problem is behaviour, not budget.

If you don't address it with her it will never be resolved.

 

[obgyn65]

Frankly I am surprised about those comments advising a divorce, unless they are meant as jokes.

My preferred option is bbbamI's, below.

If you don't already, I suggest keeping a detailed spreadsheet of expenses.

Then, plug your numbers into a financial calculator such as FireCalc and see what your results may be for your future retirement needs.

If she sees in 'black and white', this may enable her to understand the situation more clearly. ...that it is very possible to run out of money. If she wants to spend more money, then she'll have to continue to work to buy her toys.

 

[Alex in Virginia]

I hate to say it, but that would be a band aid on a bigger problem. You need to confront the issue, which won't be pretty. But then getting a divorce as you near retirement age isn't either. BTDT

+1!! By covering your wife's overspending you are facilitating it. How you stop that now is a big and hard question. But you have to.

Don't focus on trying to change her behavior. Work on changing yours.

Cancel the joint credit cards and position her to have to apply for her own. Set up separate bank accounts. Stick your excess money in anything (CDs or Treasuries, even). They have to be a better investment than covering your wife's overspending, because your return on that is a big fat ZERO.

And -- not wanting to be negative, but -- who says that she won't divorce you one day for one reason or another (maybe even that there's not enough money anymore.

I hope I have not upset you, but there it is.

Alex in Virginia

P.S. -- My wife and I have never had this problem. From the beginning, we set up 3 separate bank accounts (hers, mine, joint for household and joint expenses), and separate investment accounts. We have argued about a lot of things over the years, but never about money.