How to talk to your partner about retirement savings

Approaching "the talk" sooner than later, you'll get your retirement savings on track.

Steps to financially plan for your retirement
Understand and respond to each other's needs
"Anticipated needs must first be addressed and defined with precision," she says. "This requires stealth budgeting. Is there enough from existing sources – income, capital or ability to leverage – to fund those needs?" she says.

Then we've all got our wants, like when we want to retire or whether we want to slowly leave the workforce instead of packing our bags for good at age 65. "In fact, today many families are contemplating two retirements, not just one (person's), at different times. This requires an understanding of what income 'layers' will affect the couple's overall economic power in retirement," she says.

Take advantage of couple power
If you watch any amount of television, you've probably noticed commercials about retirement savings tend to feature couples.

"Retirement planning has become very geared towards couples," Drake says. And there are tax advantages in Canada you can benefit from when you tick the Married box on your tax return.

"A spouse with a higher income during his or her career that is expecting a nice pension can contribute to a spousal RRSP in the other's name. This reduces the taxes paid in the year it was contributed and also helps level out the income of the couple in retirement so that they pay less tax then as well," Drake says.

Jacks adds, "Even if a couple has never co-mingled funds before, the tax (return) is a major force to be considered, and this requires joint filing and joint discussion to maximize income splitting opportunities."

OK, we're talking. But we don't know what to do next
"If both partners are unsure of what they should be saving for their retirement needs and wants, then consider a fee-only financial advisor," says Drake.

This advisor can give you an unbiased opinion on your finances and advise what you might need to change to reach their retirement goals, he says. You can also read up on the subject in the Doug Nelson book Master Your Retirement: How to fulfill your dreams with peace of mind (Knowledge Bureau, 2008).

Page 3 of 3 - Learn why it's important to talk about retirement savings with your partner on page 1.

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