Money Squabbles Arise When Couples Retire. How to Avoid Them.

“Having to (quickly) adapt to change is something that we don’t have a natural affinity for,” Win says.

Three common disagreements are spending priorities, worries about running out of money, and legacy questions. Couples can resolve these differences, but it takes some work.

Resolving spending priorities   

Spending priorities often change in retirement, and couples quarrel over how much money each person is spending, using vague terms like too much or too little. Jim Colavita, wealth management advisor at GenTrust, says communication and planning can mitigate many of these squabbles. 

“A lot of the problems I’ve seen in my career with retired couples is they’ve never really laid out a definition of what is a lot and what is a little,” he says.

He recommends couples write down, whether on a piece of paper or a spreadsheet, how much they agree to spend annually on certain activities, such as trips, eating out, hobbies or other discretionary spending. It can be a dollar figure or a percentage of income. Using specific numbers removes ambiguity and creates continuity. 

He recently met with a couple who both wanted a vacation in St. Martin, but one wanted a week-long vacation, and the other pushed for a more expensive three-week trip. Colavita reviewed the costs for a three-week trip, discovering it fell into their travel budget. They agreed to take the trip.

Colavita says discretionary budgets can have a little wiggle room. For this couple, if they budgeted $10,000 and spent $12,000 on trips, it wouldn’t hurt them financially. If they budgeted $10,000 and spent $50,000, that would be a problem, he says.

Worries about running out of money

No one knows how long he or she will live, and the fear of outliving assets is a major worry for couples, even if they agree on other aspects of their financial life.

Colavita says he worked with a couple in their late 60s where the second partner recently retired. Although they are financially comfortable, with homes in New York City and Fire Island, N.Y., the recent retiree emailed Colavita nearly weekly about becoming broke. 

Colavita created elaborate spreadsheets detailing expenses, conservative asset growth, dividend interest, inflation and other detailed information to show the couple that unless a 2008-type event happened every other year, they were in a comfortable spot.

He says what brought it home for the couple was pointing to their real-life spending habits, which averaged about $200,000 a year for the past five years. Provided they didn’t spend $1 million in a year, they could live on their assets to age 100-plus. He runs these numbers whenever the couple considers a lifestyle change, such as demonstrating that buying an additional home in South Beach, Fla., was unaffordable with their goals.

Market volatility heightens these worries, especially when one partner suddenly becomes more interested in family finances. Eric Kirste, principal wealth manager at Savvy Advisors, worked with a couple nearing retirement, where the husband drove the financial decisions. 

After 2022’s market volatility, the wife became worried about how much the couple was spending and the portfolio’s aggressive investments. Along with the couple, Kirste mapped out the impact of current spending levels and the potential wealth benefits of investment choices.

He created a budget and helped to foster more communication with the couple to bridge their different spending priorities, along with an investment strategy that they could agree on. “Last year there was a lot of scary news out there. And it prompted them to make sure that they were in the right place,” Kirste says.

Leaving a legacy

Couples may differ when on spending money on children and grandchildren, whether to give it now or in an estate plan. Colavita reminds parents and grandparents that they don’t owe anything to the next generation. “You have every right to spend it,” he says.

For couples who want to bequeath something for children and grandchildren, he recommends leaving illiquid assets such as homes and jewelry. Most retired couples have half or more of their net worth in illiquid assets, he says. “You can leave them something, but leave them to things that you definitely can’t spend now,” Colavita says.

Kirste says if one partner is adamant on spending on children now, couples can compromise by discussing their values and the activities that mean most to them when it comes to younger generations, such as trips or funding education. 

He’s working with a retired couple who decided to take their children and grandchildren to visit national parks once or twice a year. He has the couple agree to budget a specific dollar amount annually to that goal. Each year he asks if this is an important goal for them.

“It’s not a one and done, but it’s revisiting that on a yearly basis,” he says.

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