According to a survey conducted by Fidelity more than 4 in 10 married people do not know how much money their spouse earns. It extends to the point where people could not even identify which salary range their partner falls into. About 10 percent of those who got it wrong were off by more than $25,000, reports CNN Money.
The overall knowledge gap is getting wider, as in the previous survey done by Fidelity, 16 percent less people were wrong about their spouse’s salary. However, according to USA Today, 72 percent of couples surveyed believe they communicate very well.
John Sweeney, a retirement and investing expert at Fidelity expressed his surprise on the issue. He noted that not knowing the household income makes it difficult to plan finances and save ahead for the future.
We were surprised how many missed the mark.
The miscommunication does not stop there, as 36 percent of the couples had different ideas about the amount of money they have in their savings accounts and other investable assets.
John Sweeney adds that people are not keen on discussing money with one another. He does, however, mention that couples who are starting relationship should communicate about their finances in order to create a sense of security when planning for the future.
There’s always been a reticence to talk about something personal like money (…) For folks more experienced in their relationship, to think about retirement planning, and being aligned, provides a high degree of confidence as people enter into retirement.
As one of the reasons, researchers mention the rise in the number of people who consider themselves independent workers or self-employed, which means they get paid per project, rather than a set annual salary. It also involves people contract working in addition to salaried work.
Another reason mentioned is the stock market. The S&P 500 is up more than 33 percent over the past two years. That means that for C-level executives with pay tied to stock performance, this could increase their annual pay more than their spouse would guess.
Almost half of the couples had no idea how much they would need to put away to continue their lifestyle once they retired and 47 percent could not agree on how much savings they would need. 60 percent of the couples did not know or were uncertain about what they will receive in Social Security pay-outs once they stop working.
Sweeney then stated that the gap in this particular knowledge is easily filled by visiting the Social Security Administration’s website, where they can check their estimated benefit pay-out.
Even for folks in their 30s, 40s and 50s, this is an important statistic because Social Security will provide a floor for retirement and form the basis of a firm financial plan.
Christopher Olsen, a financial services adviser based in Lodi, California, recommends the couples to involve a financial professional. He stated that having a ‘neutral third party’ can help couples discuss issues they find difficult to address.
By creating a safe place for couples to talk, I am able to help people work through money issues (…) I meet with my clients every six months. Sometimes I think they wait until they see me to have difficult conversations and work through them with me.
Researchers state that having a financial plan, makes many of the people feel calmer about the future. Among those with a retirement plan, 42 percent of people expect to live a very comfortable life once they retire, compared to only 18 percent of people who feel confident without a plan.
Olsen then adds that having a financial plan strengthens relationships, as in his practice he has noticed a link between openness in financial matters and functional, long lasting relationships.
Earlier today, Immortal News reported a couple winning a $15M wedding gift, and the above research implies it would be best to conduct some financial planning and allocate it accordingly.
Do you agree couples should tell each other how much they earn?