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By Orlando Maldonado

All couples can benefit from having a conversation about retirement. Merrill Lynch Wealth Management shares tips on how to put a plan in place to pursue your goals.

Difficult financial decisions are common on your way to retirement. Questions about Social Security, Medicare and how best to draw down retirement assets are just some of the topics to discuss with your partner. But before you begin these discussions, it is important to have a more personal conversation about each other’s goals for retirement; this will help to guide the decisions you make for the next stage of your life.

Use this checklist to get the conversation started and be sure to make it a yearly tradition to revisit your plans together.

1. Will we retire at the same time?

Many couples find this to be one of the hardest questions to answer. One of you may be looking forward to winding down a satisfying career, while the other is still enjoying the pace of full-time work.
“Statistically, women tend to live five years longer than men,” says Karen Burns, head of the Goals Based Consulting Group at Merrill Lynch. “Particularly when a wife is the younger spouse, there may be good reason for her to keep working a while longer so that she will not outlive their retirement savings.” Having one spouse work longer may also make it possible for one or both spouses to delay claiming Social Security benefits — a choice that can increase the size of your benefit and entitle your spouse to a larger survivor’s benefit.

2. How will we spend our days?

Decisions about travel, family time and other retirement pursuits are as individual as the couples who make them. But different choices carry different price tags, so it is important to at least have a broad outline of how you want to spend your time together. “Try making a list of retirement objectives with your spouse each year,” Burns suggests. As you get closer to retirement, “have some long talks with your spouse to work out the differences between your two lists and figure out a plan for accommodating each of your most important priorities,” she says.

3. Where will we live?

Your choice will most likely have a major impact on your retirement finances. Downsizing from a house to a condominium could free up cash to bolster your savings and might also reduce outlays for property taxes and upkeep. Houses age too, and if you keep the family home, its maintenance needs are likely to increase. On the other hand, relocating could boost — or lower — other expenses. State income taxes and local property taxes, as well as the overall cost of living, can vary widely by location. For example, Alaska, Florida, Nevada, South Dakota, Texas, Wyoming and Washington have no state individual income tax — though some impose other levies, such as Washington’s state estate tax.

4. Whose investing style will we follow?

During your working years, you and your spouse may have managed your own 401(k)s and IRAs in line with your individual investment preferences. That does not have to change as you move into retirement, but it is important to work with your financial advisor to coordinate an overall portfolio that serves your mutual goals. As Americans live longer, it is also “increasingly important to continue to explore investment strategies that will help your portfolio continue to grow even as you begin to draw down on it,” says Debra Greenberg, a director in the Personal Retirement Solutions Group at Bank of America Merrill Lynch.

5. Will we leave our money to the kids or to charity?

If you have arrived at this question, it means that you have worked through the basic issues, but it may still inspire passionate conversation. For couples who may not see eye to eye on sharing their wealth with their kids, a multigenerational health and education exclusion trust (HEET 1), could be the answer. This type of trust is designed to see to it that children and future descendants will not have to worry about medical or college costs. Paired with a fund for each child to cover emergencies or retirement, it can ensure that children are provided for while still allowing you to give a portion of your estate to charity.

Any information presented about tax considerations affecting client financial transactions or arrangements is not intended as tax advice and should not be relied upon for the purpose of avoiding any tax penalties. Neither Merrill Lynch nor its financial advisors provide tax, accounting or legal advice. Clients should review any planned financial transactions or arrangements that may have tax, accounting or legal implications with their personal professional advisors.

This material should be regarded as general information on Social Security considerations and is not intended to provide specific social security advice. If you have questions regarding your particular situation, please contact your legal or tax advisor.

Bank of America Merrill Lynch is a brand name used by several Bank of America Corporation businesses, including, but not limited to, Retirement and Philanthropic Services. Bank of America Corporation is a financial holding company that, through its subsidiaries and affiliated companies, provides banking and non-banking financial services.

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[1] A HEET is a trust created during life or at death to which none of a donor’s generation-skipping transfer (GST) exemption is allocated, but the funds may be used for education and medical expenses of grandchildren and more remote descendants paid directly to the educational institution or medical provider.

Orlando Maldonado

Orlando Maldonado

Merrill Lynch

For more information, contact Merrill Financial Advisor Orlando Maldonado of the Camp Hill, PA office at 717.975.4668 or orlando_maldonado@ml.com.


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