MONEY Love + Money

The Single Most Important Money Talk for Couples

The Voorhes

A new MONEY poll of millennial and boomer couples suggests that getting on the same page about your biggest money goal —retirement— leads to a happier and stronger union.

Married for 38 years, San Jose couple Carol and Ron Beck started getting serious about retirement in their mid-thirties. By that time, they had two kids and realized they needed to be thinking about their family’s future. So they set some savings goals, and continued talking about their plans in the years and decades that followed. Ron planned to retire around 65, and did. Carol is expecting to quit in the next two years. “We’re still deciding where we’d like to retire to,” Ron says. But even on that they have a good idea: a home near their daughter in Monterey, Calif.

There’s no question that couples need to plan together for retirement. In fact, since amassing the requisite amount of money will take time, retirement should typically be first on the list of priorities. “When it comes to goals, everything else comes next,” says Elizabeth Grahsl, a financial planner in Dallas.

A new MONEY poll of boomer and millennial couples suggests that we may need a little more help with this goal then we think. Some 79% of millennials and 91% of boomers surveyed say they are in agreement with their partners on saving for retirement. But MONEY also found that, among people who are married or living with a significant other, one in 10 boomers and four in 10 millennials don’t know their partner’s retirement account balance, while 14% of boomers and 40% of millennials don’t know when their partner plans to retire. That backs up a 2013 Fidelity poll that found that 38% of couples disagree on the lifestyle they expect, 36% on where they will live, and 32% on whether they will work. The costs of not being aligned are substantial: You could end up with less than you need at the finish line.

Here’s how you can avoid such a fate while strengthening your union and your finances.

Know your retirement wish lists. Since the amount of savings you need depends on your wants, create a “vision plan” together, says Brad Klontz, a financial psychologist and the author of Mind Over Money. Both of you should write down at what age you want to retire, where you want to live, and what you expect your life to look like. Do you want to stay put, downsize … sail around the world? “Come to the table with your dreams,” Klontz says. “Where you agree, it will be easy to adjust your finances because you are excited.”

Do a reality check. First, are you saving enough for the life you want? Check what your nest egg is on track to produce in annual income with T. Rowe Price’s Retirement Income Calculator, and see if that squares with your vision.

Second, keep in mind that retiring at the same time as your spouse typically isn’t the best move. Wives are often younger than their husbands, and women have longer life spans, so if a wife retires with her hubby, she’ll probably need to draw from their retirement savings for longer.

Also figuring into the equation are Social Security benefits, which make up 38% of income for the average retiree and which you’ll also want to coordinate with your spouse. One way to maximize benefits is to “file and suspend.” The higher earner files, then immediately defers benefits to let them grow (they rise 8% for every year you delay between full retirement age and 70). Assuming the lower earner is at full retirement age, he or she can then claim a spousal benefit, deferring his or her own benefit, which will also rise in the meantime. As you near retirement, run this and other basic scenarios using the benefits planner at ssa.gov or more detailed ones at maximizemysocialsecurity.com ($40).

Create a holistic plan. Make sure you’re acting as a team when it comes to saving and investing. If you’re a two-income household, you probably have access to two 401(k)s, for total annual tax-deferred savings of $36,000, or $48,000 if you’re both 50-plus. Stash at least enough in each to get the full company matches. If you can’t max out, sign up for automatic increases as your pay rises. “This is so basic it’s like breathing,” says O’Kurley, “yet a lot of couples don’t talk about it.”

You also want to think of your portfolio as one, and make sure you don’t have overlap or overexposure in your overall mix. The Instant X-Ray tool at Morningstar.com can help you figure this out. As a general rule, the percentage of your portfolio in stocks should be equal to 110 minus your age; the rest should be primarily in bonds. But if one or both of you have a traditional pension, you could adjust the bond allocation lower, since the guaranteed income allows you to take more risk.

Got several years between you or different tastes for risk? A UBS survey found that half of couples have divergent risk tolerances, but among them, those who choose an allocation between their preferences tended to be most satisfied. It’s also okay for the more risk-averse partner’s plan to be tilted toward bonds and the other’s to serve as a counterbalance in stocks, if that keeps the nervous one from overreacting to volatility. Another reason to split the baby: If your plan has lousy bond fund options, say, you could use your spouse’s plan to fulfill that allocation while using your 401(k) for stocks.

More from Love & Money:
Poll: How Boomer and Millennial Couples Feel About Love and Money
Why Couples Need to Get Financially Naked
This Is the Magic Number That Can Help Couples Avoid Money Fights

 

MONEY Love + Money

Why Couples Need to Get Financially Naked

The Voorhes

A new MONEY poll of millennial and boomer couples suggests that baring it all when it comes to money leads to a happier—and richer—relationship.

Katy Klein and her fiancé, Charles Hagman, both 30, began opening up about salaries, savings, and student loans just nine months into dating. The topics came up naturally as the Seattle couple figured out their plans for attending a pal’s wedding.

“Some of our friends were going early and renting a home by the beach,” says Klein, who works in PR. “So we had a conversation about whether that was in our budget … which spurred other conversations.”

Hagman, a software engineer, had intended to dig into those issues anyway. “I wanted someone who had similar savings goals,” he says. But for Klein, it was new terrain: “I’d never laid it all out.” Now that she’s done so, however, she says that financial transparency has set a solid foundation for their marriage.

Experts would agree. “Couples have less conflict about money when they share information,” says Terri Orbuch, a Detroit family therapist and the author of 5 Simple Steps to Take Your Marriage From Good to Great. Knowing where you stand and what you want to accomplish builds trust and a sense of teamwork. Plus, getting on the same page gives you a better shot at hitting your goals and less risk you’ll unwittingly work against each other, she says. Thus, it’s crucial for married couples—and those headed to the altar—to open their books.

A new MONEY poll of boomer and millennial couples suggests that both generations are on board with baring all. When it comes to what partners should discuss before marriage, boomers and millennials both say the docket should include debt (78% of both groups), savings goals (69% and 74%, respectively), and amount saved (63% and 56%).

And yet other research suggests that few married couples truly practice transparency in their daily lives. A few years back, an American Express poll found that 91% of people avoid money talks with their partners; another from last year revealed that only 52% have financial conversations at least weekly. Worse, one in three adults in relationships say they lie to their partner about money, the National Endowment for Financial Education found.

As part of a monthlong series on Love and Money, we’ll be digging into our survey data and suggesting ways that couples can strengthen their unions and their finances. First step: Get financially naked. Here’s how to do it.

Choose a happy moment. Start the transparency conversation around the time of a positive event, like a promotion or a wedding, or at least when there’s an absence of major problems. “Finances are much easier to talk about when you are flush and happy,” says Mary Claire Allvine, a financial planner in Atlanta and the author of The Family CFO. “And opening up in good times makes it easier to talk about money when life changes for the worse.”

If you’re starting in a void, point to an article you’ve read, like this one. Say something like, “It made me realize I don’t know where we stand. Maybe we could take a look some night this week?”

Go full frontal. Crack open a bottle of wine and start opening your books. Begin by making a net-worth statement. This summary of assets and liabilities gives you a framework toward your common goals. It can also help you uncover flaws in your strategy, like debt growing as fast as savings. Use an online net-worth calculator like the one at Bankrate.com or an Excel spreadsheet. Plan to update your numbers quarterly.

If you have the energy, make a list of monthly expenses—review the last few months of bank and credit card statements—so you know where money is going. Or upload your accounts to an online money-management tool like Quicken or Mint, says Miami financial planner Ashley O’Kurley.

Find out your mate’s musts. Setting goals together begins with understanding your partner, says Patrick Wallace, a financial planner with Higher Strata Wealth Management in Hurst, Texas. He suggests you both answer these questions: What are the three most important money lessons you learned growing up? What are your three biggest money worries? What are your three biggest goals? What are the three most important ways you want to use money to leave a legacy? The answers will help your spouse understand what is important to you. “Your goals may still be in conflict,” says Wallace, “but it will be easier to compromise.”

 

MONEY Love and Money

POLL: How Boomer and Millennial Couples Feel About Love and Money

The results of MONEY's exclusive survey on the financial lives of millennial and boomer couples. Bottom line: The differences in how the two generations manage money in relationships are striking. But so, surprisingly, are the similarities.

Last year, MONEY conducted an exclusive survey on men, women, and money. The results captured sweeping changes in the way husbands and wives manage their finances and the impact of money on a marriage, particularly as wives bring home more of the bacon.

This year, we dug down into generational differences: Our latest MONEY poll compares the perceptions and behaviors of some 500 millennials and 500 baby boomers when it comes to their relationships and money. The results reveal distinct differences in their approaches to financial matters. But one theme crosses generations: Couples who are in sync on issues like saving and budgeting feel more financially secure, argue less about money—and have hotter sex lives. Click through the gallery for a look at the numbers.

 

MONEY Workplace

H&M’s Very Un-American Vacation Policy

Getty Images

European-style vacation makes inroads.

Fast-fashion retail giant H&M launched its first national recruiting campaign on Thursday, hoping to attract thousands of new employees to help it open 61 U.S. stores this year. The bait the company is using to net these new workers: a higher-than-minimum-wage salary and distinctly non-American benefits package.

While the hourly pay—about $12 for full-time employees— is more in line with that of its retail competitors, it’s the vacation policy that betray’s H&M’s roots as a European company. Full-time employees start with up to three weeks of paid vacation per year, with the opportunity to earn up to five weeks’ vacation, plus seven paid sick days and six paid holidays, and your birthday off.

Unlike European countries, which require employers to give workers at least 20 days of paid vacation each year, “the U.S. is the only advanced economy in the world that does not guarantee its workers paid vacation,” according to a report by the Center for Economic and Policy Research.

Austria and Portugal, for example, legally require employers to give workers 22 days of paid vacation time and 13 paid holidays. Sweden, the birthplace of H&M, offers 25 days, and Australia and New Zealand both grant at least 20 vacation days per year to their citizens.

Some countries go even further—France gives its citizens 30 paid vacation days and one holiday, while the United Kingdom mandates 28 days for its workers. Even our close neighbor Canada grants every worker 10 paid vacation days and 9 paid holidays.

If you include legally mandated paid holidays, the gap between the U.S. and the rest of the world becomes even more pronounced. Most of the wealthiest nations guarantee at least six paid calendar holidays per year. The U.S. and Japan alone offer none.

The average private sector worker in the United States receives 10 days of paid vacation and six paid holidays per year. Nearly 25% of U.S. workers have no paid vacation or paid holidays at all.

Only half of low-wage workers have any paid vacation, compared with 90% of high wage workers. Those low-wage workers who do receive vacation benefits typically get nine paid vacation days each year, vs. 16 days for high-wage workers. If you compare across all workers, the average for low-wage workers drops to four days and 14 days for high-wage workers.

So while it’s great that individual companies like H&M have decided to offer employees more competitive compensation packages, perhaps it’s time for the U.S. as a whole to join our economic peers and give workers a much-needed paid break.

MONEY Workplace

The Costly Career Mistake Millennials Are Making

tug of war over money, one person letting go of rope
Sarina Finkelstein (photo illustration)—iStock (4)

More than 60% of millennials don’t negotiate salary when receiving their first job offers. It's costing them big time over the course of their careers.

When millennials land job offers, it seems the only question they’re debating is whether to accept. But they should also be thinking about the terms of that acceptance, since there’s a good chance they’re being offered less than they deserve.

Maybe it is because we are just grateful to get any job offer, or maybe we feel we don’t have enough leverage to make a strong case, but only 38% of millennials negotiate their first salary, according to a new survey from NerdWallet and Looksharp, a company that helps connect graduates with jobs.

That unwillingness to haggle and ask for more is costing us thousands of dollars a year. Three-quarters of employers said they could raise starting salary offers by 5% to 10% during negotiations, according to the survey, which collected responses from 700 employers and almost 8,000 recent grads who entered the job market between 2012 and 2015.

There appears to be little risk in asking for a modest pay bump. Of the grads who did ask for a salary increase, 80% were at least partially successful. The vast majority of hiring managers—90%— said they had never retracted an offer because an entry-level candidate attempted to negotiate. Rather, 76% said candidates who negotiated appeared more confident for doing so.

Successfully negotiating that initial pay raise can also lead to a major increase in your lifetime earnings. A report from the New York Federal Reserve released earlier this year found that lifetime earnings are determined in your 20s, since the bulk of earnings growth happens during your first decade of work. The report, which studied the career paths of 5 million workers over 40 years, found that the average worker’s salary growth stagnates after the first 10 years, and only the wealthiest workers continue to see meaningful increases throughout their careers. That’s why your initial salary might be the most important of your career.

Of course, it isn’t just salary that young workers can negotiate when an offer is on the table. The survey found that of grads who asked for changes to other benefits, many successfully altered the terms of their work schedule (75%), paid time off (62%), bonuses (58%), and stock options (38%).

For help boosting your own chances of a successful negotiation—and to avoid missing out on more than $100,000 in lifetime earnings, according to Nerdwallet—see our Ultimate Millennial’s Guide to Negotiating Salary.

MONEY Face to Face

How to Tell Your Kid You Can’t Afford to Pay for Her Dream Wedding

parents wedding contributions budget child
Getty Images

Use this dialogue to let your child know you can't bankroll the ceremony.

Of course, you’re delighted your baby has found “the one.” But if the prospect of paying for your child’s special day has you hearing wedding blues instead of bells, it’s no wonder.

Weddings are costly affairs, running $31,213 on average in 2014, according to TheKnot.com’s annual Real Weddings Survey. While that number is certainly skewed higher by the extravagant spenders out there—we’re looking at you, bridezillas—it’s still scarily large.

Scary especially for the bride’s parents, who contribute 43% of the total wedding budget, amounting to about $13,422 on average.

Don’t have such a large sum put aside for your kid’s nuptials? Don’t spend the big day worrying about impending bills or, worse, going into debt. Here’s how to gently break it to your child that you can only give so much.

YOU SAY: “I’m so glad you and James could come over for lunch. I want to hear all of your wedding ideas.”

Because this conversation can be difficult and you don’t want to disappoint your child, you may be tempted to put it off. But if you wait too long into the planning to state your intentions, the bride and groom could have already made (costly) assumptions.

So as soon as the celebration around the engagement dies down a bit—and before the planning starts to get underway—schedule a time to sit down privately with the couple to talk about what you can contribute.

Don’t leave the groom out! “The couple needs to hear it together first-hand since a wedding is all joint decisions and both need to know the budget,” says protocol and etiquette consultant Nancy R. Mitchell.

YOU SAY: “Your father and I want to help you both pay for the wedding, so we’ve set aside $XX,XXX for you to use to cover costs.”

Once you and your spouse have run the numbers to come up with a figure you can responsibly give without endangering your own savings goals, let your child know exactly what that amount is.

You might be tempted to simply say that you’ll cover, say, the catering or venue costs rather than naming a number. But that’s a bad idea: “Without clear budget guidelines, your child will be writing checks without knowing what the balance actually is,” says etiquette expert Diane Gottsman. And that could put both of you in hot water when the bills come in.

YOU SAY: “We would love to be able to help out more, but we’re still paying your brother’s college tuition and helping your grandparents with medical bills.”

If you can’t afford to help at all or the amount you can give is less than what you or your child had hoped for, explain why.

You don’t need to go in too much detail—your child doesn’t need to know the exact amount in your bank account or the total cost of the mortgage. But you can remind him or her gently of your current money obligations, says Gottsman, who owns The Protocol School of Texas.

This way they understand where the number is coming from and can truly appreciate your generosity.

YOU SAY: “Of course, you can always count on us to make centerpieces or call venues, or anything else you need.”

Remind your child that though your ability to help with money is limited, you’re willing to put unlimited (or at least less limited!) time and effort into helping make the big day special.

Wedding planning is stressful, and your child may need a supporting hand when the to-do list runs down past her knee. Let her know that you’ll always be available for a venting session or to make 500 packets of Jordan almonds at the last minute.

YOU SAY: “What are your plans for any expenses that go above what your father and I can help out with?”

As a parent, you don’t want to see your child’s marriage start in debt. But nearly half of couples do end up spending above their wedding budgets.

So some of the best help you can provide is to help your child make concessions that will help them stay within their means.

“Always pressure them to stay in budget and scale back,” says Minneapolis-area certified financial planner Sophia Bera.

“If they do decide to spend more than they have on the wedding, and it’s only a few thousand dollars over, I’d recommend dipping into their emergency savings account,” she adds.

If it’s more than a few grand, she suggests putting the costs on to a 0% credit card (MONEY recommends Chase Slate, which charges no interest for the first 15 months). “But then they need to build into their new household budget a method to pay it off quickest,” Bera says.

More on wedding planning from Money.com:

10 Most Expensive Places to Get Married

8 Ways to Throw a Memorable Wedding for Less

Say Yes to a Cheaper Wedding Dress

MONEY Family

Here’s What Your Mom Really Wants for Mother’s Day This Year

father and sons doing dishes
Getty Images

The best part: It won't cost you anything.

Forget buying flowers or jewelry or making reservations at that fancy brunch spot. While your mother or wife might be happy to receive these tokens of affection, what she really craves on this day meant to celebrate mothers is a day off from being the mom.

So put that $170 back in your wallet (that’s the average amount people plan to spend on Mother’s Day) and roll up your sleeves. Here, according to popular mom bloggers we consulted, are the ingredients for a perfect day. Try them at your house.

Let Mom Sleep Late

“I’m still a pretty new mom, and the thing that I would appreciate the most is the gift of sleep. If my husband gave me a few ‘sleep-in’ coupons that I could cash in whenever I wanted, I would be completely overjoyed. It wouldn’t cost him a cent, and I would be so grateful.” —Anna Newell Jones, andthenwesaved.com

Take Over the Cleaning

“I want a laundry fairy to swing by the house and wash, dry, fold and put away all of the clothes (especially mine)” —Anna Luther, mylifeandkids.com

“My ideal Mother’s Day gift would be my family all pitching in together to clean up the house, do the dishes, fold and put away the laundry, and make me something yummy to eat while I took a bubble bath or read a good book.” — Crystal Paine, moneysavingmom.com

“Aside from the little sweet, self-made gifts from my toddlers (which I love), the Mother’s Day gift I want the most is a self-cleaning house. Like a Roomba, but it would clean every facet of our place. I’d never have to clean again! And I would be the happiest mama in the world! I would settle for no cleaning for a week though, or even a day.” —Alana Pace, parentingfromtheheartblog.com

Close the Kitchen

“I want a day off in the kitchen. No making 17 breakfasts (for three kids) and 22 snacks and a lunch that no one but the dog will eat.” —Anna Luther, mylifeandkids.com

“The best gift I have received for Mother’s Day was a surprise family picnic by the river. I didn’t have to worry about any of the planning. My husband had the car packed with blankets and food and drinks and towels. The kids were all ready to go and had swim suits and sunblock and cards they had made for me. All I had to do was relax and enjoy a day outside.” —Scarlet Paolicchi, familyfocusblog.com

“I want to finish the day with a dinner out, so not only can I be cooked for, I don’t have to clean up a tornado size mess in my kitchen.”—April McCormick, firsttimemomanddad.com

Leave Her Alone

“Prior to becoming a mother, I thought Mother’s Day was all about showering mom with love, hugs, and kisses, while following her around all day. Oh, how wrong I was. Now that I’m a mother, I’ve realized that’s the last thing I want. For Mother’s Day, I want to finish a cup of coffee, without any interruptions. I want to sit in a lawn chair and read a good book for more than five minutes, without any interruptions. Mother’s Day is the one day of the year that mothers deserve to be appreciated for all they do, without having to do anything, or be bothered by anyone.”—April McCormick, firsttimemomanddad.com

“As a stay-at-home mom the greatest gift my husband can give me is time to myself. I want to go into a store and shop without having to worry about leaving when a battle of wills breaks out between me and my preschooler. I want to slip into a quiet corner of a coffee shop with my E-reader and an iced caramel macchiato. I want just a few minutes to let my mind rest from the constant awareness of where my child is and what he is doing. When my husband gives me time off of my mom duties, he’s speaking straight to my heart. More importantly, I come back refreshed and can give my family the best version of me.” —Kim Anderson, thriftylittlemom.com

“I want to do all the stuff I used to do when I wasn’t a mom. I want to know where all my stuff is, listen to music with swears in it, take an uninterrupted shower, an uninterrupted nap, start drinking at 4 pm, stay up way past my bedtime, and sleep until I felt like it the following morning. Now that would be the ultimate Mother’s Day gift.” — Susie Johnson, not-your-average-mom.com

MONEY Ask the Expert

When Does a Gift Trigger a Tax Bill?

Ask the Expert – Everyday Money illustration pulling cash out of wallet
Robert A. Di Ieso, Jr.

Q: “I want to pay off a sizeable ($15,000) debt that my adult son has. Are there any tax implications for either of us? —Jack

A: Your generosity will have no impact on your son’s taxes, but in theory it could affect the taxes on your estate down the road.

Every year, you’re allowed to give another person up to the annual gift tax exclusion—this year $14,000—without reporting the transfer to the IRS or having to pay taxes on the sum, says CPA Cari Weston, senior technical manager of the American Institute of CPAs taxation division.

For any gift above that limit, you will have to report the excess to the IRS through Form 709. That sum will be subtracted from your total lifetime gift and estate tax exclusion. Currently you can transfer up to $5.43 million in assets federal-tax-free over your lifetime, making it unlikely that any gifts will push your estate above that threshold.

Of course, there are easy ways to get around the limit and avoid any risk of estate taxes. If you’re married, you and your wife can together give up to $28,000 to your son per year. Or, if your son is married, you can gift him $14,000 and gift his spouse the other $1,000 to settle the debt, suggests Weston.

Paying the full amount directly to the creditor, while perhaps a wise financial move given your son’s current predicament with debt, will not help you get around the gift-tax limit, says Weston. No matter who the check is made out to, the IRS will still count it as a gift.

If you are covering tuition or medical expenses for another person, says Weston, you can get around the gift-tax rule, however, as both of these types of gifts are considered non-taxable.

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