My fiancé takes saving for retirement more seriously than I do, but some simple advice from a financial expert completely changed my thinking
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- My fiancé and I have always been open about our finances, but it wasn't until we got engaged that we
- started talking about our different approaches to saving for retirement.
- He's been saving since his early 20s, and I didn't get going until I hit 30. Even now I don't make regular contributions to my SEP IRA.
- After meeting with a financial expert, though, I'm starting to get on the same page as him — I now understand that making monthly contributions can earn me more interest than stashing my cash in a savings account.
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My fiancé and I don't keep our finances a secret from one another. We're open and honest about both our money mistakes and successes. For the most part, we've learned that we are both on the same page about major financial decisions, from being cautious about accumulating unnecessary debt to sticking to budgets throughout the month so we don't have to tap into our savings account or emergency funds.
But after we got engaged and our dinner-table talk turned to combining our finances, we realized we had one major thing we disagreed on — our retirement savings goals.
For most of my 20s, I rolled my eyes at the idea of funding a retirement account I couldn't access until my 60s. I wanted to spend my hard-earned money on my life in New York City and building a strong financial framework for myself (including growing my savings account and not carrying balances on my credit cards). It didn't help that a few months after giving in and opening up a 401(k), at a company that matched the amount I put in every month, that company laid me off. When I became my own boss, full-time, at 26, the idea of saving for retirement was forgotten.
It wasn't until I was on the cusp of turning 30 that I took my retirement seriously and opened up a SEP IRA, but even then, I hardly put money into the account and even today am slow to fund it.
My fiancé was very different. He had a 401(k) and had actively contributed money starting in his early 20s, and is passionate about making sure he has a well-funded retirement account to tap into later in life.
Was this an issue we needed to agree on? Was this something we could each go about in our own ways? Marriage was about to force us to confront that question and navigate the decision.
Here are the steps we took to decide how aligned we needed to be about our retirement plans.
Having tough conversations
After getting engaged, combining finances and getting on the same page with our retirement plans became the No. 1 thing we fought about. We decided that we'd both listen to each other's feelings about funding retirement accounts — without interrupting or debating. We set a timer for five minutes and each of us used our time to explain our reasoning.
My fiancé saw it as a great way to plan for the future. I saw it as a roadblock to living our lives to the fullest right now.
We also decided to comb through all of our financials to see if there was any way we could move things around in our budget so it would feel easier to contribute an agreed-upon, equal amount.
At the end of this step, we decided that we wouldn't contribute equal amounts. My fiancé would continue to put in a certain percentage of his paycheck every month, and I would wait till the end of the year to determine how much I felt I could move from my savings account into my SEP IRA.
Meeting with a financial mediator
The next thing we did was get an outside opinion. We met with a trainer at The Financial Gym, a financial advice firm, who looked at our individual financial histories and compared them side by side. Then, the trainer listened to both sides of our retirement argument and offered advice.
One thing I learned during this session was that if I contributed to my retirement account monthly, the cash would earn more interest in my SEP IRA than in my savings account. This "passive" income mentality made me lean toward getting on the same track as my fiancé and putting in a monthly contribution.
At the end of this step, I changed my mind and decided to put in a non-set amount every single month from my paycheck. My fiancé was happy that I changed my mind on the frequency of my contribution because it allowed him to feel at ease with the knowledge that I was slowly taking my retirement plans seriously.
Reevaluating on a yearly basis
The final thing we did was to agree to disagree when it came to the amount we both contributed. Since his income doesn't fluctuate as much (he's a full-time employee and I'm a small-business owner and freelancer), he would put in his set amount, which was higher than I felt comfortable contributing. We decided that equal contributions didn't make sense.
We also decided, after the pandemic altered a lot of my work projects and income, that funding our retirement accounts and the strategy we used was something we'd evaluate on a yearly basis. With a need to get creative with our budget in recent times, retirement planning has once again fallen off my radar — at least for now.
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