Archives for December 13, 2018

Does the size of your partner’s bank account matter?

People are more realistic than romantic by the time they wed, Abby Rodman, a psychotherapist in Boston, told MarketWatch. “We’re living in a time when people are waiting longer to get married,” she said. “Today, both genders are closing in on 30 by the time they tie the knot. If they’ve already experienced a long-term, ‘head over heels’ relationship before marriage, they’ve also learned that those crazy in love feelings do subside over time.” She described this as a “somber maturity.”

Rsearch supports her theory. Some 56% of Americans say they want a partner who provides financial security more than “head over heels” love (44%), a survey released Friday by Merrill Edge, an online discount brokerage and division of Bank of America Merrill Lynch BAC, -0.24% found. This sentiment is held in almost equal measure by both men and women (54% and 57%). Generation Z (born between 1996 and 2010) is the only cohort to choose love (54%) over money.

Merrill Edge polled more than 1,000 people aged 18 to 40 with investable assets between $20,000 and $250,000. For this purpose, investable assets was defined as the value of all cash, savings, mutual funds, CDs, IRAs, stocks, bonds and all other types of investments such as a 401(k), 403(b), and Roth IRA, but excluding a primary home and other real estate investments. Aron Levine, head of Consumer Banking and Merrill Edge, blamed “uncertainty and a lack of financial planning.”

And even though they want partners with a certain socioeconomic status, the respondents said they remained coy about their own finances. They ranked nearly all major relationship milestones — including meeting their prospective in-laws, being intimate, traveling together and discussing politics — ahead of discussing their finances. They said they postpone the “money talk” with their significant others, especially when the topic is debt (60%), salary (57%), investments (55%) and spending habits (51%).

Priorities may change with a second wedding

Such attitudes may also depend on whether it’s wedding No. 1, 2 or 3. “I am a hopeless romantic,” said Randy Kessler, who wrote the book, “Divorce: Protect Yourself, Your Kids, and Your Future,” and also practices family law in Atlanta, Ga. “I still think people marry more for romance than for finance. However, for a second or third marriage, people may be looking for financial security after their divorce left them with a sense of severe financial insecurity.”

Jacqueline Kennedy Onassis reportedly said, ”The first time you marry for love, the second for money and the third for companionship.” Whether or not that quote is apocryphal, after the death of President Kennedy, “Jackie’s next step was to think about her children, including their financial security,” said Fran Walfish, author of “The Self-Aware Parent” and a Beverly Hills psychotherapist. “Marriage doesn’t hold the same lifelong commitment that it did in prior generations,” she said.

This is not the first study to find that love, marriage and socioeconomic status go hand-in-hand. A recent analysis of U.S. Census Bureau data by the Pew Research Center, found that, among adults ages 25 and older, 65% with a four-year college degree were married, compared with 55% of those with some college education and 50% among those with no education beyond high school. “Twenty-five years earlier, the marriage rate was above 60% for each of these groups,” it said.

Financial security was a big factor in choosing to get married at all. Never-married adults with family incomes under $75,000 are more likely than those with higher incomes to say that “not being financially secure” is a major reason they are not married: 47% of those with incomes less than $30,000 and 40% of those with incomes of $30,000 to $74,999 say the same thing. And just 21% of those with incomes of $75,000 or higher say that.

Rodman says the retirement industry has contributed to this focus on financial security, which she says is not necessarily a bad thing. ”We’re bombarded with warnings that we’re not saving enough for retirement,” she said. “Nothing spells financial anxiety more than the threat of growing old impoverished. So, if you don’t have enough money, where will you get it? Marrying someone who has some wealth is one way to sidestep that potentially bleak future.”

Modern life is also expensive. “It’s easy to understand why marrying with an eye toward financial stability is attractive,” she added. “Kids are expensive. Homes are expensive. Heck, even weddings are a fortune! People who watched their parents struggle don’t want to do the same. If we’re going to pledge our lives to someone, why not have it be a financially secure one?” She adds one caveat: “If you’re going to marry for money, you might want to be sure the other person has it.”

Wealthier men and women want different things

Singletons also look for signs that their potential partner has money. For instance, iPhone owners are 21 times more likely to judge others negatively for having a less expensive Android, while those who have an Android are only 15 times more likely to judge others negatively for having an iPhone. And those who have older models of either smartphone are 56% less likely to get a date, according to a recent survey of more than 5,500 singletons aged 18 and over by dating site Match.com.

Another twist: Different sexes want different things, especially if they are financially secure. Men with higher incomes showed stronger preferences for women with slender bodies, while women with higher incomes preferred men with a steady income, according to this survey of 28,000 heterosexual men and women aged between 18 and 75 from Chapman University in Orange, Calif., and published in the January 2016 edition of the journal “Personality and Individual Differences.”

And wealthier couples don’t necessarily last longer than those who earn less. Indeed, the more you spend on a wedding ceremony, the shorter the marriage, according to a survey of 3,000 couples released in 2014 by two professors in the Department of Economics at Emory University in Atlanta. Couples who spend $20,000 on their wedding are 46% more likely than average to get divorced; that risk falls to 29% higher than average for those who spend $10,000 to $20,000.

So what does it all mean? Money matters in matrimony as much as love. “I’ll go out on a limb pretty confidently here,” Rodman said. “Marrying for love is the only good reason to marry. The beauty is most of us have the freedom to do that. And, if we’re lucky enough, we get to exercise it. Because when life gets tough — and it always does — it’s the love that will sustain you, not the cash. And if marrying for money is still on your to-do list, you know what they say: ‘You’ll earn every cent.’”

Major New Year’s resolutions rarely stick; it’s more reasonable and sustainable to operate on the margin by improving from where you are. While it’s unlikely you won’t hit the gym seven days a week, you could resolve to exercise more often than you did last year. It’s nearly impossible to never eat an unhealthy meal again, but you can make an effort to eat a little better and add more veggies to your plate.

The same philosophy applies to your workplace resolutions. Chances are, you won’t become fluent in Mandarin within a year’s time. You could, however, learn to make basic conversation in the language in a way that’s helpful to your career.

Set resolutions that you can honestly and realistically keep. Go for mild improvement and take the long view when it comes to your career.

Make resolutions that are plausible.

1. Focus on fixing one personal flaw.

You’re not perfect. Nearly everyone has holes in their game — things they need to work on. Maybe you’re not very organized or perhaps you’re always just on the edge of being late for meetings. Identify one area for improvement and really work on fixing it.

Doing this requires a plan. Decide what you want to fix and then break it down into achievable steps. You may also want to share your plans with your boss so you have added accountability. However you do it, make sure you stay focused and keep working toward your goal.

2. Learn one new skill that will strengthen the whole team.

This isn’t just about self-improvement. Ideally, you will learn a skill that helps your team. If there’s a person who struggles to take time off because he or she does something nobody else can do, learn how to do it to make the team stronger. This surely won’t go unnoticed, especially by the person who can now enjoy a vacation or time at home with their family.

Look and see what’s needed and identify where you could become most useful. Maybe having someone with strong Excel skills would be useful, or perhaps your group needs someone who can code a little. Find the need and fill it.

3. Try something new.

It’s easy to fall into ruts. Even if you’re good at your job, you can become complacent if you do the same thing for too long. That’s why it makes sense to try new things.

Your novice adventure could be volunteering for a new project or taking part in your company’s philanthropy efforts. Have lunch with a colleague you’ve never gotten to know. Be open to new experiences. You never know what doors could open for you if you enter a new space or make a new friend.

4. Make new connections.

Whether it’s increasing your contacts within the company or meeting people who work elsewhere in your field, it’s important to expand your network. Be bold. Reach out to people you want to meet and offer to buy them lunch or coffee.

The worst that can happen is someone will say no or ignore you. In most cases you’ll make new contacts, and that could benefit either one of you down the line.

Be active.

None of these resolutions are passive. They’re not about avoiding something or stopping doing something else. Instead, they demand you take action and grab an active role in managing your own success.

There’s nothing hard on this list (though meeting people can be a challenge for some). Everything is manageable and will deliver tangible long-term results. Remember, you’re not building your career for a week, a month, or even years. You’ll be working for decades, so it’s important to improve your foundation each and every year.

Retirement is a huge financial and lifestyle decision. Retiring successfully takes more than just telling your boss you’re not coming in anymore. You need an end-to-end plan that will get you through a time period that may well measure in decades during which you’ll no longer be drawing a paycheck or have the other benefits associated with working.

These five steps to making sure you’re ready to retire will help you get much of the foundation in place you need to improve your chances of success.

No. 1: Know what you’ll get from Social Security

Your Social Security benefit is based on how much you earned while contributing to the program, how long you worked, and what age you are when you begin collecting benefits. Because it’s such an individualized amount, the absolute best spot to go to find out how much you’ll get is the Social Security Administration itself.

With an online My Social Security account set up on Social Security’s website, you can get the absolute best estimate of what you can expect from the program once you retire. Just be sure to note the assumptions inherent in even Social Security’s estimates, as your final payout amount will not likely be exactly the same as its projection.

No. 2: Have a plan for your healthcare

Some companies offer their retirees access to health insurance, while others offer a stipend to help cover at least part of the cost of insurance. In most cases, though, once you retire, you’re on your own for health insurance costs.

If you’re at least 65 and are a citizen or permanent resident of the United States, you can qualify for Medicare. That helps cover many of the costs of healthcare, but only Part A generally comes without a premium attached, and even then, only for those who qualify.

If you’re under 65, however, and don’t have access to insurance through your former place of employment, you’ll generally have to buy coverage through your state’s marketplace. Premiums vary by factors such as what level of coverage you choose, your age, whether you smoke, and where you live. In addition, you may receive a subsidy depending on your income and household size.

No. 3: Choose how you’ll take your pension (if you have one)

If you’re fortunate enough to still have a pension or other form of guaranteed income above and beyond Social Security, be sure you understand the choices you have regarding how to take it. Often, pensions offer income strategies based on your life or the longer of your or your spouse’s life. In addition, many pensions offer cash buyout options instead of a straight income stream.

Key to note is whether your pension is integrated with Social Security. If it is, your pension will back out some portion of your Social Security income from the amount it pays you. This is important to realize in advance so that you don’t count on income you won’t actually receive.

It’s also important to understand whether your pension income will adjust for inflation over time or whether it’s fixed for life. If your payout is fixed for life, note that what might feel like a sufficient payment early in retirement may not go nearly as far later.

No. 4: Make sure you have a retiree-friendly portfolio asset allocation

If you need to rely on your portfolio for a portion of your retirement income, you need to ensure that you have at least some of your money in bonds or other higher-certainty assets than stocks. The reason for this is that once you start drawing money from your portfolio, it gets substantially harder to wait out a downturn in the market and still wind up OK.

On the flip side, you don’t want too much of your money tied up in conservative assets, either — particularly if you’re expecting a long retirement. This is because over long periods of time, stocks have a better shot of providing the growth you need to keep up with inflation. How much you keep in stocks and how much you move to bonds depends significantly on your personal financial situation. Still, a good rule of thumb is to not keep money in stocks that you expect to spend within the next five years.

No. 5: Brainstorm ways you’d like to fill your days and weeks

In addition to the financial benefits you get from working, most jobs provide structure that keeps your days busy and gives you some sort of social interaction with suppliers, customers, and/or coworkers. While you may feel intense relief from the freedom early in your retirement, that may turn to boredom and depression unless you have a plan to fill your time with activities that are important to you.

Consider volunteering for an organization you financially supported during your working years or one you wanted to volunteer for but never had the time. You might also think about taking a low-stress retirement job just to make sure you have that structure and interaction that come with the job.

If you like to travel, retirement can be a wonderful opportunity to do just that. In addition, if you have family and friends you’d like to get reacquainted with, your retirement can be a great time to do that as well. Just be wary of the old quip that retirement is often a time of “too much husband and not enough money,” and make sure you’re finding the right balance in your togetherness with family and friends.

Get ready for your next great adventure

With a solid plan in place, retirement can be a wonderful time. Get your ducks in a row regarding the financial, health, and activity aspects of your plan, and you’ll have a great foundation upon which to launch the next chapter of your life.

It’s no secret that money is a major source of contention in many relationships, so much so that it’s currently a leading cause of divorce. But while many U.S. adults might turn to their partners to help pay the bills or provide a dose of much-needed financial security, they’re alarmingly silent when it comes to money-related specifics. According to a new Merrill Edge report, here are four issues Americans are loath to discuss with their romantic partners — and why that’s a mistake.

1. Debt

A disturbing 60% of U.S. adults won’t talk about debt with their partners. But if you don’t have that discussion, you’re apt to encounter difficulties making financial decisions together. Imagine you and your partner live in a rental and want to buy a home. If you have $20,000 in credit card debt, that might disqualify you from getting a mortgage jointly. And that, in turn, could damage your relationship.

That’s why it’s crucial to be open about your debt, especially if it’s at a level where it might be dragging down your credit score. Looping your partner in might help you devise a plan for getting out of that hole. For example, your partner might agree to cover the rent for a number of months so that you can take the money you otherwise would’ve contributed and use it to chip away at your balance.

2. Salary

A good 57% of Americans won’t discuss their salaries with their partners. If you’ve been keeping that number a secret, you’re doing yourself a disservice. Knowing how much money you and your partner have to work with collectively can help you make better joint financial decisions, whether they involve moving, buying a car, or even taking a vacation. And if you’re worried that your partner will get jealous or act differently after learning that you make a bundle, remember that as long as you don’t flaunt it, having that extra income could work out well for both of you.

3. Investments

Investing money is a good way to grow wealth that can help you meet different financial objectives. Yet 55% of couples don’t like to talk about the ways they invest. By opening up on that front, however, you and your partner might learn from each other and adopt strategies to improve your personal portfolios. If you’re hesitant to share the value of your investments, you can, at the very least, review the way your assets are allocated with your partner and ask him or her to do the same.

4. Spending habits

The way you and your partner approach spending money will probably play a big role in your relationship. If you’re among the 51% of Americans who don’t talk about their spending habits, now’s the time to sit down with your partner for a serious discussion.

Imagine you’re a spender by nature and your partner is a saver. Those attitudes might cause you to clash at different points in your relationship — especially if you start combining finances and working with shared bank accounts. Rather than take that risk, get on the same page with your partner about how much you should be spending on a regular basis and how much you should be socking away. Better yet, create a budget together so that you’re equally aware of where your money is going.

Maintaining a closed-door policy on all things financial is bound to hurt your relationship sooner or later. If you’ve been keeping your partner in the dark about your debt, salary, investments, or spending habits, schedule some time to discuss those matters in an open, pressure-free setting, and encourage your partner to follow suit. In doing so, you’ll be taking steps to avoid conflict, all the while allowing yourselves to support each other in achieving the financial goals you find most important.