Scott Burns: Stay safe on retirement spending

[Martha]

When my husband starts talking financial matters, I have this urge to turn on HGTV.

The spouse and I do talk about financial matters, but not a lot. Most of the investing decisions are left to him. He has the time and inclination for the research and until lately I have been working too much.

Now that I have a bit more time, I am becoming more interested in how he invests our money. I began participating in this board to become more educated in the financial planning part of retirement. Yet I really don't want to tread too much on what has been my spouse's turf. And my eyes still tend to glaze over when he talks commodities, hedge funds, etc. He also has very strong opinions about index funds, which are mostly contrary to this board.

If it was me alone, I am sure I would make different decisions. However, the ones he has made have worked out well for us, so I have nothing to complain about.

 

[Jarhead*]

And to continue on this hijacked thread:

As a woman, I find this thread fascinating.  To be honest, my now new husband and I are very much in tune with regard to finances and retiring early and I can't imagine being married to someone who didn't have a similar alignment.  Money is one of the main friction points of a marriage/relationship and usually because of control issues.  I would hazard that most of the people posting here have retiring early or at least financial security as a prime value or goal in their life---

For relationship incompatibility compensation, is your $ex life that good?

Bridget aka Deserat

Bridget: My wife and I are not compatable in a number of areas of our lives, but once a year,
Oops, got to go, my wife just walked by and rubbed my shoulders, tonights the night

 

[haha]

For relationship incompatibility compensation, is your $ex life that good? Bridget aka Deserat

No; but I once thought it was.

Mikey

 

[JWV]

 Yet, although I listen as intently as possible, many times I have no idea what the hell she
is trying to tell me.  JG

Get the testosterone out of your ears guys. :

I do the money stuff in this family. He'd rather watch OutdoorLife Network or whatever it's called.

I do love my HGTV! (Remember when *I want my MTV* was the cool catch phrase)

Judy

 

[John Galt]

Hi Judy! Always interesting to find a couple where the
female handles the finances. Whatever works is cool with me. I could never let go of the purse strings even if
I thought my DW had any talent in that area
(she doesn't), but that's just me. I suspect the total incomprehensibility of our economic discourse must
be a Mars/Venus thing.

JG

 

[rick]

Interesting discussion.

In our family, my wife handles the short-term finances, and I'm responsible for the long term finances.

This seems to work out fairly well.

We both have a goal for semi-early retirement, and so far it looks like we might make it.

 

[charlie]

In our home, Lyn has a checking account to pay all the
regular monthly bills. I take care of the big stuff like
insurance, taxes, etc. and I handle all the investments.
I have a monthly amount sufficient to cover average
monthly bills transferred to a MM account from my IRA.

She then transfers funds to her checking account as needed. This works pretty good for us. At first I transferred enough monthly to cover the big stuff but soon learned that she is more comfortable not having to worry about "saving" for the big expenses. She
manages the routine expenses very well and I almost never look over her shoulder. However, I have noticed
that the amount in the MM fund hovers near zero
most of the time. From time to time we "negotiate"
the monthly transfer amount. Saves a lot of stress on
both of us.

Cheers,

Charlie

 

[FlowGirl]

Chalk up another one for wife handling the finances.

Out of necessity my husband and I have a very 1950's arrangement - right now he brings home most of the money (it wasn't always that way) and I manage it.  I doubt he knows how much we have in our checking account and he probably only has a ballpark idea of our networth.  He's very interested in financial stuff but goes months without internet access and just doesn't have time to keep up.  I brief him every few months and he likes doing the taxes, so that helps to keep him on top of things.

It works out very well, he's an extremely generous and laid back person and doesn't care how I spend money as long as the bills are paid and we max out our retirement accounts.  It helps that he knows I'm extremely frugal, hate shopping, and have almost no interest in buying "stuff".  We love to travel and aside from that my only splurge are quality groceries since cooking is my main hobby.  My husband has yet to complain about that  

 

[LawGirl]

I'll jump on this bandwagon as well. My husband is a financial analyst and was the one who forced me to pay off my credit cards when we first married (we were both 24). He was also dead set against carrying a monthly balance, which was totally opposite of how my parents handled their money. However, I then took the ball and ran with it, finding that I actually love to read Money magazine, the Wall Street Journal and books like The Millionaire Next Door.

Now I handle all of our finances, including deciding how much to save for retirement and how to invest it. I prepare a quarterly net worth statement for him to look at. I draft our annual budget. He then reviews and makes suggestions, which is a good check on my tendency to think that we can invest more than is really realistic given the lifestyle (fairly frugal given our income) that we'd actually like to lead. I also prepare our taxes, which have gotten more complicated since I've become self-employed.

He would like to retire by 52, but has never run the numbers to see whether it is possible. I am the one who worries about balancing the costs of two young kids (ages 2 and 4), saving for college and managing to retire at an early age, hopefully before we get to 52. He just takes it on faith that it will happen. It will, but only because I've forced us to save a significant percentage of our income.

I have another lawyer friend about 10 years older than me who also handles her family's taxes and finances, which are even more complicated than mine since her husband is a partner in a large law firm. We often get together to talk about whether to invest in I-bonds or TIPS, the best way to save for college, etc. The male lawyers that we've worked with, whose wives don't work and spend most of their time shopping or decorating, think we are crazy.

It works for us and our families, though.

Lawgirl

 

[John Galt]

Hello Lawgirl! Interesting story. I wish my wife took more of am interest, but I couldn't turn this stuff over
to her even if she was financially oriented. She is not
a saver and never has been unless she had a very
specific relatively short term goal. Otherwise, it was
"just use the credit cards and worry about it later".
I can't be too critical as there was a time when I followed
a similar path (also it was easier when all that interest was deductible), and........ it's her money. When we got married her finances were a mess. Worked for over a year cleaning it up and getting her debt free.
I guess if she really wants to work forever and just
continue as we are, I would just accept it. It's not quite what we talked about before we got married, but
things seldom turn out like you expect.

Man plans and God smiles........................

JG

 

[SDY888]

My wife is the micro-manager - all our bills, domestic matters, holidays, clothes, etc, etc. and she generates all the savings surplus through being very frugal.
Me - all the macro stuff - allocating the savings and investments, retirement funds, education funds, mortgages, re-mortgages, other houses and the jointly owned sideline business.

I never question what she spends from the household accounts, because I know and trust she manages it well. She never asks about any of the investment positions or strategies, although I update her once a quarter (her eyes usually glaze over after about 5 minutes).


This seems to suit our interests and abilities and has worked very well for us.

 

[mark]

My wife doesn't know and doesn't care.

I'm the one who does the reading and planning.

We deposit both paychecks into one checking account and I pay all the bills, including a check to the mutual fund. That way, whatever is left, is spendable. I just try to raise the mutual fund amount without telling her.

 

[ordway]

My husband and I split the financial duties according to interest, pretty much.

First off, we have totally joint finances (and have had since well before we were married). It all goes into one big pool. Neither of us has allowances or anything like that - anything over $20 or so we usually talk about (even if it's just a casual "I think I'll get a new ___") and under that amount we both trust each other not to waste money.

My husband handles keeping track of all our records and expenses in Quicken. That includes balancing the checkbook, reconciling credit card bills, etc. He does a great job, and I would never have the patience to do it. He periodically generates neat little graphs and charts and we look them over together, so we both always know our net worth, monthly spending, typical expenses, and the way those expenses have been trending.

I handle the investments: researching them, knowing what tax-advantaged accounts we can put money into, and deciding on what the investments should be, and deciding where the new money goes. I'm definitely the investment guru - he's interested in knowing the broad outlines and has absorbed the general principles over the last few years (and knows what we have, since he does the record-keeping). So he understands the whole point of asset allocation, diversification, risk, etc. in broad terms, but I'm the one who's actually interested in the nuts and bolts. That means that we have conversations like "Honey, I just put $10,000 in a new fund - an international index fund." "Cool!"

I also take care of doing the taxes (I have more tolerance for filling out stupid forms than he does) and mailing off bills.

It really works very well for us.

 

[John Galt]

I think all of the different systems couples have devised for dealing with this stuff is pretty interesting.
However, statistically speaking some of those who
didn't care or didn't pay attention will wish they had
at some point. Just a sad fact of life.

JG

 

[ESRBob]

Holly,
Your husband is a lucky man!

My wife and I have a similar split -- interesting how that works.  Investments and taxes on the one side (that's mine) and monthly bills and spending on the other side, (that's hers).

We don't use quicken, but just put the monthly SWR in the checking account at the bank and if the overdraft-protection slips start coming in the mail, we try to postpone buying stuff the following month.  Perilously close to John Galt's napkin?

 

[BUM]

It seems to me that today's family financial matters are bigger than many of yesterday's small businesses.

It definately helps me to have DW in the loop. Two heads are better than one. I worry about either spouse that "just doesnt have the head for it". What happens if the planner dies first?

 

[John Galt]

Good point BUM. I am trying to address that problem right now by updating my will, etc. to take the
pressure off those I might leave behind. Already it's
getting complicated, and of course the attorney's
meter is running which I hate. For example, he says
"Who is going to run the company if you are gone?"
Excellent question. I can do it before breakfast. Someone coming in cold would be lost, at least for quite a while. Then, there is the problem of how to divide
up the corporation (I own 100% now). When I wrote my own will, I was just going to let my heirs/executor
deal with all this stuff. My DW convinced me that was pretty
inadequate.

JG

 

[indymom]

What does an executor usually do? Just carry out the will's requirements, or do they actually have to do planning and/or decision making?

 

[Michael]

An executor is also responsible for paying all back taxes and other debts from the estate. If the execoutor makes a mistake, he is personally liable for the taxes and debts. The IRS will take your assets if you distribute estate assets to beneficiaries before all taxes are paid.

 

[BUM]

Being the executor of a small estate can have its moments. Esp. when the relatives come calling.

Michael is right about setteling the debts of estate. In my case we got all dad's mail forwarded to me and waited for any bills or statements to show up.

It was a small estate so there were no real surprises. OTOH if it was a large estate, I'd get an attorney and/or a CPA involved and pay them to handle the details AND the relatives.

BUM

 

[mark]

I've tried to interest my wife in our long term family finances. I think its a case where she will listen to what I say, but has no interest in reading anything about it herself. I basically have a 'cheat sheet' that shows what I've read and what our expectations should be for future returns and withdrawals. Plus added pages with monthly expenses and accounts. At least it might prevent someone giving her too high expectations for what our SS, pension, and investments will support.

She will fill out the tax forms each year while I sort through fund forms. Plus she does computer support and mows the lawn (riding mower). I have to weedeat.

 

[Martha]

I have to weedeat.

I think your food budget is too tight.

 

[Nords]

I think your food budget is too tight.

... and then there's that high-fiber diet...

 

[mark]

keeps me regular

 

[AltaRed]

Back to the theme of finances, I pretty much take care of all the finances, both short and long term. A combination of my strong desire to research investments and read investment materials and a bit of type A personality makes it that way. However, everything is on Quicken and every few weeks or monthly at most, I pull up some graphs and tables for DW and I to have a discussion about. We talk about current status of net worth, asset allocations and what is happening in the markets and with our investments.

She is aware of where all the accounts are. All except for RRSP's (Canadian versions of IRA's) and my company brokerage account for stock options are joint. I never make an investment decision without involving her in the discussion and on occasion, based on her input, we don't end up making that particular investment. All the documentation on Adjusted Cost Base, differentiation of her versus my investments (required in Canada since there is no such thing as a joint filing) is readily accessible for her to read and updated annually for access by an executor in event of either or both of our deaths.

She and I are almost completely compatible on spending habits and budgets and consequently we do not have a "written" budget that we follow. We have a single joint chequing account and one joint VISA credit card. She accesses the ATM as she pleases and pays off a few store credit cards she has in her name each month. We do a Quicken check every 6 months or so to see our rate of spend and collectively decide whether we should make adjustments on where the money is going.

Finances and money is the single most important thing where we don't have any arguments at all.