Hartford Research Identifies the Habits of Retirement “Power Couples” |
|
|
|
Written by U.S. Insurance News
|
|
Friday, 22 February 2008 |
With a little help from financial professionals, retired and near-retired clients can do what it takes to become a “power couple.”
With a little help from financial professionals, retired and near-retired clients can do what it takes to become a “power couple.” And in the process, and with a little luck from the markets, they’ll be set for their golden years.
The question is, what’s a power couple look like?
Joint research conducted by the Hartford Financial Services Group, Inc., and the MIT AgeLab explored how pre-retired and retired couples, ages 45–74, approach their finances and discuss long-term goals. From the national study emerged four financial planning styles and the habits of highly effective planning couples.
- 36 percent of couples reported that one spouse is the dominant financial manager. Of this group, the “Drivers” (17 percent) handle all financial matters of the household, while the “Passengers” (19 percent) are either minimally involved or not involved at all in financial matters. The Drivers and Passengers constitute two of the four planning styles.
- 53 percent said they are part of a couple where both partners are equally involved in all aspects of financial management for the household. These “Joined at the Hip” managers do not divide or delegate financial tasks; instead, they make every financial decision and take every action together.
- 11 percent reported that they practice a division of labor approach. The “Divide and Conquer” managers are part of a couple in which each partner takes the lead on some aspects of the finances and plays a secondary role on other aspects.
“A shared management style is an essential approach for couples today,” observed Maureen Mohyde, director of corporate gerontology at the Hartford. “However, the couples who seem to have the most success in financial planning for retirement are those who practice a division of labor.”
Research showed that the Divide and Conquer couples accomplish key successes at a higher rate than couples who adhere to one of the other planning styles. For instance, managers in these couples are most likely to have prepared a contingency plan to assure the financial security of the surviving spouse (45 percent versus 32 percent for Joined at the Hip, 27 percent for Passengers, and 8 percent for Drivers) in the event of the death of the partner.
Divide and Conquer managers are also super savers; 38 percent of this group have saved at least $750,000 for retirement, compared with 16 percent among Joined at the Hip, 25 percent among Passengers, and 17 percent among Drivers.
The successes of the Divide and Conquer couples result in a higher reported enjoyment of retirement. Forty-six percent of this group say they are enjoying retirement more than expected, compared with 29 percent for Joined at the Hip, 23 percent for Drivers, and 18 percent for Passengers.
Mohyde notes that couples using the Divide and Conquer management style are the most likely to have considered three important questions related to the death of a spouse:
- How the death would impact the monthly income of the remaining spouse.
- How the expense of the dying spouse’s illness would impact the remaining spouse’s assets.
- How prepared the surviving spouse is to manage the household finances.
John Diehl, certified financial planner and director of the Hartford’s Retirement Solutions Group, said their ability to turn emotion into action is what separates retirement “power couples” from other couples.
“According to our research, more than 50 percent of couples are already collaborating on their finances,” Diehl said. “By taking a few additional simple steps to plan for each other’s future financial well-being, we can help them avoid issues later in life. A trusted financial advisor can help.”
The survey showed that Divide and Conquer couples are far more likely to seek the assistance of a professional financial advisor (72 percent, versus 59 percent of Joined at the Hip, 44 percent of Drivers, and 56 percent of Passengers).
|
