Navigating the financial disparity in retirement savings between spouses can be a delicate endeavor. To offer guidance, I’ve gathered insights from founders and a trends analyst, covering strategies from hosting a “Dreams & Goals” discussion to establishing a “Future-Focused” budgeting plan. Here are six creative budgeting strategies and emotional communication tactics couples can use to tackle this challenge and secure their future together.
Budgeting Strategies for Couples to Plan for Retirement
Host a “Dreams & Goals” Discussion
One suggestion for couples facing this challenge is to have a “Dreams & Goals” conversation. Set aside time for an open and nonjudgmental discussion about each other’s dreams for retirement, any current financial fears, and the goals you both wish to achieve together.
By framing this conversation around your shared dreams rather than the immediate financial stress, both partners can fully understand each other’s perspectives and priorities. This approach leads to a deeper emotional connection and a stronger commitment to face this financial challenge together.
Bayu Prihandito, Founder, Psychology Consultant, Life Coach for Men, Life Architekture
Related: See my feature in 5 Steps Women Should Take in Their 20s, 30s, 40s and 50s to Be Set for Retirement
Find a Balanced Saving Approach
My spouse is more of a spender than a saver, whereas I am the extreme opposite. I am keen to achieve financial independence and retire early, whereas my spouse enjoys work and would be happy to keep working.
When we first got together over 20 years ago, our different attitudes toward money caused quite a lot of friction. Over the years, I have realized that enjoying life now is as important as saving for a comfortable retirement and that balancing our different attitudes to life and finances is the best approach.
We have agreed on a middle ground; we both save money to allow us to retire early, but we set aside a budget each month to enjoy going out for meals, holidays, etc.
The simple answer is that we sat down and talked about it several times until we came up with a plan and approach we were both comfortable with. I realized/accepted that my spouse’s attitude toward money was just as valid as mine and that we needed to live for the present and plan for the future.
Jonathan Wright, Founder, Aiming For FIRE
Related: See my feature in Securing Your Future: A Step-by-Step Retirement Planning Guide
Adopt a “Two-Pot” Retirement Strategy
A creative and viable budgeting approach for couples facing a retirement savings imbalance is the “two-pot” strategy. The “two-pot” strategy involves establishing two separate retirement accounts: one for the spouse who has already been saving and a dedicated “catch-up” account for the spouse starting late.
A portion of the household’s disposable income is then automatically allocated to fund the catch-up account monthly, treating it as a non-negotiable expense. Contribution levels can be periodically reviewed and adjusted based on progress toward joint retirement goals. The two distinct pots allow the couple to simultaneously maintain the existing nest egg while aggressively building up the other’s savings through focused, forced contributions.
This tangible, partitioned approach provides clarity, prioritizes the pressing need, and can be scaled over time, making it a disciplined yet flexible way for couples to get on track together for a secure retirement.
Brian Meiggs, Founder, My Millennial Guide
Create a “Retirement Catch-Up Plan”
One approach could be implementing a “Retirement Catch-Up Plan.” This plan involves the party that is lagging agreeing to cut back on non-essentials a little and redirecting those funds toward retirement.
If spending less isn’t an option, the shortfall might be made up by agreeing to redirect a future windfall (like bonuses, tax refunds, or inheritances) directly into their retirement account.
Along with practical strategies, you’ve got to consider the emotional side. There has to be space for both partners to voice fears and frustrations about your retirement saving strategy. Your goals have to be “shared goals” if they’re going to stick without causing resentment.
As you level the playing field, celebrate your progress to keep motivation high and remind each other why you’re doing this.
Clay Cary, Trends Analyst, Coupon Follow
Related: See my feature in Retirement Savings: 5 Steps To Take Now If You Want a Comfortable Retirement
Utilize Real Estate for Retirement Funding
One exciting strategy involves leveraging real estate, specifically through a transaction between spouses that could offer tax advantages and contribute to retirement savings.
The spouse with more financial resources could “sell” the family home to the other spouse. This arrangement could potentially unlock equity from the property, providing funds that can be directed into the less financially prepared spouse’s retirement accounts (e.g., an IRA, 401(k), or an index fund).
Additionally, this works even better for investment properties due to tax benefits. When selling an investment property, the depreciation starts over, and the tax income from that rental property can be deducted, which can be leveraged for further savings.
Abby Shemesh, Chief Acquisitions Officer, Amerinote Xchange
Establish a “Future-Focused” Budgeting Plan
Facing a retirement savings imbalance in marriage requires creative budgeting and effective communication. One strategy is implementing a “future-focused” budgeting plan, which involves allocating a portion of the household income into a joint retirement savings account. Having a “future-focused” budgeting plan not only addresses the financial disparity but also fosters a sense of shared responsibility toward future goals.
Emotionally, it’s crucial to approach conversations with empathy, focusing on solutions rather than attributing blame. Regular “financial health” meetings can create a safe space for open dialogue, allowing both partners to express their fears and aspirations and set realistic financial goals collaboratively.
This dual approach mitigates the financial strain and strengthens the marital bond by building a foundation of trust, mutual support, and shared objectives for a secure future together.
Mike Schafer, Louisville Personal Injury Lawyer, The Schafer Law Office
Related: See my feature in Why Is It Normal For You To Worry About Retirement Before You Retire?
What’s Next?
If you’re feeling overwhelmed by the financial challenges of retirement planning, you’re not alone. By using these creative budgeting and emotional communication tactics when planning your retirement, you can begin to bridge the retirement savings gap with your significant other, but implementing the strategies may require professional guidance.
Contacting a financial professional can help you gain valuable insights, receive expert recommendations, and develop a clear roadmap for your retirement savings journey. Don’t let financial uncertainty prevent you from enjoying a secure and fulfilling retirement.