As a 20-something, it is likely that your time revolved around securing a good job and living for the weekend, when you could spend time with friends, relax, and possibly even start to set a little money aside for “the future.”
When we were younger, there wasn’t really all that much to lose—at least from a monetary standpoint. But fast-forward the clock a few decades, and our world is a much different place—not just in terms of our cool electronic gadgets and space travel, but also with regard to what we look for in an ideal partner . . . physically, emotionally, and financially.
So if you’ve worked hard throughout the years and built up a sizeable nest egg, you don’t want anything to pull you off track. That includes the way you plan financially when you enter into a new relationship later in life.
Are you and your partner a good financial match?
Money Matters Change as We Age
While starting a new relationship when we’re older can be refreshing, there are some important concerns to address if you and your partner intend to move forward together.
For those who are now in “middle age,” there are likely more assets to preserve—not just from market volatility, but also in the event that a spouse or partner doesn’t manage money the same way that you do.
Communicating about Money Matters
It’s often been said that talking about money with a new partner is taboo. But if your relationship is getting serious, discussing financial matters is an absolute must. This is particularly the case if the two of you do not necessarily see eye-to-eye on saving, investing, and overall money management.
Financial planning can be a difficult task, especially when you add another person into the mix. Because of that, open communication about financial matters should ideally be at the top of your new relationship’s to-do list.
In fact, having in-depth discussions about money can often reveal what your partner’s ultimate goals are, as well as why they have(or have not) saved, invested, and planned in a certain way.
Other Items to Consider
In addition to discussing financial goals, there are some other key items to consider as a later-in-life relationship grows stronger. For instance, do you and your partner have adequate health insurance to cover the health issues that older people typically deal with? Have you considered how you would pay for a long-term care need that may arise?
If one or both of you currently owns a home, how will your living arrangements change over time? Will one of you sell your home and move in with the other person? Or will both of you sell your respective homes and purchase a new property together?
If you or your partner are currently receiving income from Social Security, there are several issues you’ll need to consider. For instance, marriage will usually impact the amount of benefits that each of you receives. And if either of you is receiving widow or widower’s benefits from Social Security, tying the knot could cause this income to stop.
Do you have legal documents in place to take care of and protect each other? Are there other family members to consider? For example, is your partner a caregiver to an elderly parent? These are all things that need to be considered and planned for, as they can have a big impact on your financial health.
Getting a New Financial Plan in Place
Regardless of whether or not you and your partner decide to combine your finances, it is important to know where you stand financially in terms of your short- and long-term goals. For instance, do you know how much you’ll need in order to create sufficient long-lasting income down the road? With people living longer today, this is a top priority, as you will probably need your investments to generate an income stream for 20 or more years in retirement. On top of that, a plan should be put in place that can help you deal with a costly healthcare need, inflation, and taxes.
Finally, you should look at the possible reduction in retirement income for the surviving partner when the other partner passes away. Will this become a major problem that needs to be addressed now?
Working with an experienced financial advisor who is also adept at planning for the LGBTQ community can help ensure that your financial plan is aligned with the most recent legislation and qualifies you for the Social Security income and other benefits that you and your partner are entitled to.
This article appears in the July 2019 edition of OutSmart magazine.