Some assets – like retirement accounts – have to be kept in separate accounts, but that doesn’t mean you can leave them out of the conversation. Couples should take a holistic view of their investments, retirement and non-retirement alike.
You may even find one partner’s workplace plan has lower fees or better investment options, Lynch says. In which case, you could direct more of that spouse’s income toward retirement savings and reserve the other spouse’s paycheck for living expenses.
Yours, mine, ours, or all mine? With non-retirement investments you have the choice of individual or joint accounts. Merging your non-retirement accounts can make management and spotting potential pitfalls like over-concentration easier. But some couples prefer to keep accounts separate.
Individual accounts are more popular among second (or later) marriages where the partners have more assets going into the marriage. Other reasons to keep accounts separate are spendthrift concerns or if one spouse is in an industry prone to lawsuits, LaRiviere says.
For any individual accounts, consider making your new spouse the primary beneficiary – especially for retirement accounts. The IRS allows spouses to treat inherited IRA assets as their own whereas non-spouse beneficiaries must keep inherited IRAs separate and may face stricter withdrawal requirements.
You spouse should have legal authority to access your accounts in the event of death or incapacitation, Robertson says.
Have monthly money conversations. If just thinking the words death and incapacitation makes you want to bury your head in the bedcovers, this is for you: The risk of something doing you part underlines the importance of planning together.
Don’t let one partner take over all investment decisions, even if she’s more investment-savvy. Both spouses need to be engaged in the investment process – and not only because either one could end up managing them alone eventually. Remember “great” marriages involve regular money conversations. It takes two to conversate.
Robertson advocates having monthly financial conversations to make sure both parties stay on the same page. Discuss where you’re going financially and how your investments are going to get you there, she says.
If one spouse is warier of investing, these conversations could be all the more beneficial. Sometimes risk-aversion is simply due to a lack of experience, LaRiviere says. “It’s easier to ratchet up the risk than pull it back,” so he often starts newer investors with more moderate portfolios then increases the risk as their comfort level grows. Involving a conservative spouse in investing conversations may be the key to unlocking his more aggressive core.
Just start investing. “The key is getting started,” Lynch says. Whether it’s $1, $10 or $1,000, whether you’re aggressive or conservative, just start investing.
We can get hung up on the process and forget that time in the market is a bigger driver of long-term returns than how you’re invested. So put whatever you can into your investments today and fine tune the rest as a couple tomorrow.