Talk Now, Retire Happily Later

Many people mistakenly assume that their mate wants the same future they do. A new book helps couples plan and achieve a retirement that satisfies both

Two people married for more than 30 years walk into a financial planner's office to talk about what they intend to do when they retire in two months. The husband explains excitedly that they are moving to South Carolina, where they own some land; they're building a small house; and they're going fishing every day. The wife looks at him and says: "And who are you planning to move to South Carolina with?" He reminds her they had bought the land to build their dream house when they retired. "That was 20 years ago," she says. "I was hoping you had forgotten about it."

Such lack of communication is exactly the kind of problem that bedevils many couples, says David Bach in his new book, Smart Couples Finish Rich (Broadway Books, $25). Bach, a senior vice-president and investment adviser at Morgan Stanley Dean Witter, offers a prescription both to avoid money conflicts and to plan a harmonious future together. While much of the financial information is basic--and similar to the advice in his best-selling Smart Women Finish Rich--Bach's new book offers some valuable new nuggets.

The problem, says Bach, is not just money. Many couples have money. What they don't have is a plan. "They go through life without making any real plans for their future together. In many cases, they've never even discussed the subject. Each assumes that somehow the other knows (and agrees with) what he or she happens to want," he writes.

DEFINE VALUES. To initiate this conversation and then create a plan, Bach has a couple start by thinking about and writing down what's most important to each of them--their top five values, what the purpose of money is. "Smart financial planning is more than a matter of numbers," he says. "It involves values first and stuff second."

Say, for instance, two of your top values are providing financial security for your kids and spending time with your family. But you don't have a will, didn't set up a trust, or didn't buy enough life insurance, and you work so hard to pay your mortgage you never see your family. Bach says that when you don't live according to your values, you're miserable--and ripe for conflict with your partner. So he recommends looking at whether your financial behavior is consistent with what you say is most important to you. If not, write down five actions you need to take to put your life in sync with your values. In this case, you might want to draw up a will, increase your life-insurance coverage, and consider ways in which you can reduce your living expenses to spend more time with your family. Perhaps you can downsize into a smaller home or move to a city that has less expensive housing options.

TAKE ACTION. Bach uses this exercise as the foundation of a financial plan, which is really just a list of goals. To define your goals, he offers some rules. Among them, he recommends that you "make your goals specific, detailed, and with a finish line." So rather than just saying: "I want to own a second home," you need to identify where it would be, how much it would cost, when you would buy it, and how long it would take to save for it.

He also suggests that you start taking action toward each goal within 48 hours. "If you don't get moving immediately, even if only in a small way, chances are you'll never get moving at all," he writes. Take that vacation home. Get on the Internet and start reading about the area that interests you. Call a few local real estate agents and ask them to send you information. Rent in the area for a few weeks to see if you'll like it there.

Finally, Bach suggests discussing your goals with others. "You never know--the person you're sitting next to at a lecture may be in the perfect position to help you make your dream a reality," he writes.

The bottom line is action, and Bach's chatty writing style helps motivate you to that end. The key is to get you and your spouse moving in the same direction. Otherwise, one of you might head for retirement in South Carolina while the other waves good-bye.

Questions? Comments? E-mail or fax (212) 512-2538

By Toddi Gutner

    Before it's here, it's on the Bloomberg Terminal.