In a perfect world, both spouses would share the same investment goals and agree on the best way to try to reach them. It doesn’t always work that way, though. You’d be surprised at how often spouses have different visions of what retirement looks like. One wants to spend his retirement days golfing or puttering around in his woodworking shop, and the other wants to spend her time traveling across Europe on a winery tour.

It’s not only important to focus on the funding — you need to determine what you want to do. So many investors spend so much time concentrating on saving as much as they can. Furthermore, because they don’t have a goal in mind, couples complicate their situation by not seeking the advice of a financial adviser. Financial planners often end up playing the role of marriage counselor, working with spouses to compromise on their goals. The conversation of “what do you want to do in retirement” tends to be the last thing on a couple’s mind. Life just gets in the way with their children, dance and soccer practice, careers, promotions, home purchases, etc.

Blindly saving with no defined goal is akin to burying your savings in the back yard and hoping it will pay for your retirement. How much you need to meet your end goals influences your asset allocation between fixed and growth investments, how aggressively you need to invest, what insurance coverages are needed, and, of course, how much you need to save.

I believe the conversation of “what does retirement look like” needs to be where you start — not where you end. I recommend you base your financial plan around your liquidity needs. First define your end goal and then develop a plan on how to get there. If you want to retire at 60, first determine how much you’ll need to take you through age 62, the earliest you can receive Social Security benefits; then age 65 when you’ll be eligible for Medicare, then through your life expectancy, generally recommended as wife’s age of 92.

Think about building your retirement like building a custom home. You first define your wish list then add all the bells and whistles. The builder gives you a price. After sticker shock wears off, you start scaling back on the options you chose. Cash flow projections work much the same way. Have an adviser run different scenarios based on different options for your retirement and project how your assets will last. The different scenarios affect your maximum spending per year, which can help determine what you do.

This type of planning is even more critical for couples who are on their second or third marriage, as each spouse may have explicit wishes for the assets they brought into the marriage, specifically when the goal is to leave an inheritance for a child from a previous marriage. In certain circumstances, a couple may choose to manage their retirement accounts separately, rather than as a couple, with each spouse providing for his or her own retirement. In situations like this, estate planning and insurance planning are even more essential.

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William G. Lako, Jr., CFP®, is an Executive in Residence at Kennesaw State University’s Coles College of Business and a principal at Henssler Financial and a co-host on Atlanta’s longest running, most respected financial talk radio show “Money Talks” airing Saturdays at 10 a.m. on AM 920 The Answer. Mr. Lako is a CERTIFIED FINANCIAL PLANNER™ professional.

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