We are both 70. We retired at 62, but my husband immediately went back to work and took two part-time jobs. He is constantly worried about money. We own a home worth $550,000 and still owe $128,000 on it. We have an interest rate of 2.2%. My husband says there’s no point in taking money to pay it back. We have no further debts.
We have about $1.8 million in various retirement accounts; Many are in Roth IRAs. In order to accumulate this money, we lived very frugally. We made it, but my husband wants us to live like we didn’t save all the money. He hasn’t touched the money in the Roth IRAs yet.
He still worries about turning on the air conditioning, drives a cheap old car, wears old clothes, and lets me cut his hair. We do travel, but that’s because we’re using the money from my humble job after retirement. We stay in two-star hotels. All of our money is in various retirement accounts. Most of these accounts are in his name and I am the beneficiary even though I worked hard and contributed half. Therefore I cannot make any withdrawals.
I have the feeling that we can now live a little more beautifully. He does not do it. I drive a seven year old car that I would like to upgrade. We never bought fancy cars, only cheap ones. I would like a Honda 7267, +0.29% or a Toyota TM, +1.63%. He thinks it’s too expensive!
What use is this money to us? Don’t we have enough?
See: I want to invest $100,000 in dividend stocks, but my wife won’t do that. How do I convince them?
Dear Reader,
You have more than most retirees, so it’s not necessarily a question of whether you have enough.
It’s more about how you and your husband can find a compromise. Couples can have long, beautiful marriages and still disagree about how to spend or save money. This is fine as long as there is healthy communication and everyone feels like their needs are being met.
Talk to your husband about why he feels this way. Maybe he grew up in difficult times and never wants to return to that situation again. Or maybe he’s seen his parents or grandparents lose money in old age and he’s afraid the same thing will happen to both of you. You won’t know until you have these conversations, and they could be difficult conversations, so be prepared. Instead of starting a conversation in frustration, talk about it over a favorite meal.
However, your needs must also be met. You’re right – you’ve worked hard and contributed to your retirement nest egg, and you should have a say in how that money is spent. You raise a very important point about access to your money. You should not be excluded from your retirement savings. When deciding how much to withdraw, discuss access to these accounts. Your husband may be a cautious spender, but you should have the same access.
Your mortgage interest rate is very low. The 30-year interest rate is currently around 8%. Mortgages are generally not considered “bad debt” (unless, of course, they are extremely expensive and place too much strain on your everyday life). If you can afford your monthly payment, there’s no harm in keeping the money in your retirement account.
See also: I am 92 and will probably live to be 100. I have about $250,000. Thoughts?
Providing the numbers can also be helpful when making compromises. Look at the big picture: How much do you need for the rest of your life?
Here is a rough guide to help you get started choosing a qualified financial planner:
First, determine a payout rate. For years the rule of thumb was 4%, but this rule is hotly debated – some experts claim that 3% can be achieved. Convert that 3% to a decimal and divide it by the amount you need each year. If you need $40,000 per year and chose a 3% withdrawal rate, $40,000 divided by 0.03 equals just over $1.3 million.
When you do the math, consider all expenses, such as groceries, taxes, utilities, medications, car and home maintenance, entertainment, etc. Your annual payout can change based on inflation, interest rates, market returns and unexpected life events.
Further questions: How much are your annual or monthly pension payments and can or should they be reduced? You may want to increase these withdrawals. (Your husband will probably be less comfortable giving what you say.)
Do you have an emergency fund? Have you already taken taxes and other miscellaneous expenses into account? How much does your air conditioning cost per month? You have to balance comfort and finances. After all, this is why you saved for retirement in the first place.
You can be more concerned with your finances and not have one person call the shots, but you don’t have to fundamentally change your husband. If he’s fine wearing his old clothes and you don’t mind giving him a haircut, then stick with it.
If you both work part-time jobs in retirement, you could set short-term financial goals that allow you to spend a little more freely – and travel more. For example, you could explore Airbnb’s ABNB, +6.18% instead of two-star hotels. How much do you save when buying a used car compared to a brand new vehicle? Maybe there’s a way to put the difference into your “fun fund” to use for recreational activities.
If you’ve worked hard for a financially secure retirement, it’s important that you both enjoy it.
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