How Couples Can Work Through Retirement-Planning Disagreements

Summary

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Podcast Summary: WSJ Your Money Briefing

Episode: How Couples Can Work Through Retirement-Planning Disagreements
Air Date: May 27, 2021
Host: J.R. Whelan, The Wall Street Journal
Guest: Ann Tergeson, WSJ Retirement Reporter

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Episode Overview

This episode addresses a common yet delicate topic: how couples can effectively navigate and resolve disagreements over retirement planning. With market volatility and the high stakes of investing retirement savings, differences in risk tolerance can lead to stress and conflict. Host J.R. Whelan and retirement reporter Ann Tergeson explore real-life challenges, highlight conversations with financial advisors, and share practical strategies for couples to find common ground and safeguard their shared financial future.

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Key Discussion Points & Insights

1. Why Couples Disagree Over Retirement Investments

[02:12–02:56]

• Market volatility often exposes differences in risk tolerance between partners.
• Anxiety is heightened during retirement years when savings are being drawn down.
• Ann Tergeson shares a personal anecdote about her parents:
  • During the 2008 financial crisis, one wanted to exit the stock market entirely, while the other advocated staying the course and even buying more stocks (03:00).

Quote:
*"When risk tolerances don't match, then you can see situations where people maybe argue or they feel. One feels, we really should do this, and the other feels, no, we should do that."
— Ann Tergeson [02:22]_

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2. The Impact of Retirement on Investment Anxiety

[03:34–04:21]

• For working individuals, market losses are less frightening since there's time to recover and continue contributing.
• In retirement, seeing nest eggs drop while simultaneously withdrawing funds is particularly stressful.

Quote:
*"When you're in retirement, you're actually having to tap into that nest egg and you're seeing the value go up and down, particularly as it goes down, and you're also drawing money out. That can be really anxiety provoking."
— Ann Tergeson [03:51]_

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3. Strategies for Couples to Align on Retirement Investments

[04:21–06:37]

Assessing Risk Tolerance

• Financial advisors often use questionnaires to assess individual risk tolerances and discuss the origins of these attitudes.
• Understanding each other’s financial backgrounds and personal histories helps foster empathy.

Meeting in the Middle

• A typical solution is to split the difference on asset allocation (e.g., a 50-50 split between stocks and bonds).
• Customization is possible:
  • The more risk-averse spouse could keep a few years’ worth of living expenses in cash.
  • The more aggressive investor might allocate a larger portion of the remainder to stocks.

Quote:
*"There are ways that you can sort of meet in the middle, but also kind of manage the portfolio in a way that would give each spouse something that they particularly value."
— Ann Tergeson [06:23]_

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4. The Option of Separate Accounts

[06:37–08:20]

• Growing numbers of dual-earner couples have separate retirement accounts they manage individually.
• Pros: Each spouse can match their investments to their own risk tolerance.
• Cons:
  • Can result in inefficiencies, such as suboptimal tax allocation.
  • Focusing on individual pots may neglect the overall optimal management of the joint financial picture.

Quote:
*"It's fine if people want to do it separately. But I think it's also important to think about how the money's being managed as a whole and trying to make sure you maximize the efficiency of that, which can be difficult if you're each focused on your own separate pot of money."
— Ann Tergeson [08:13]_

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5. Reframing the Conversation: Focus on Goals, Not Just Risk

[08:20–09:40]

• Advisors sometimes suggest stepping back from risk tolerance debates and instead organizing investments around specific goals and timelines.
  • Example: College savings for a near-term need should be invested more conservatively.
  • Retirement savings for a younger couple can take on more risk.

Quote:
*"Some advisors recommend just not focusing on the question of your overall tolerance for risk, but instead trying to divide up your portfolio so that you have specific buckets of money that are tied to specific goals."
— Ann Tergeson [08:36]_

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Notable Quotes & Memorable Moments

• Personal Story: Ann Tergeson’s recounting of her parents’ reaction in the 2008 crash brings the topic to life [03:00].
• Actionable Take: "Meet in the middle" doesn’t have to mean strict compromise; flexible portfolio strategies can address both partners’ needs [06:23].
• Expert Advice: The idea of goal-based 'buckets' creates clarity and can diffuse arguments around abstract “risk” [08:36].

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Key Timestamps

• 02:12 — Roots of couples’ investment disagreements
• 03:00 — Tergeson’s personal anecdote about her parents in 2008
• 03:51 — Anxiety unique to retirees drawing down assets
• 04:33 — How advisors help couples start the conversation
• 05:25 — Examples of compromise and tailored strategies
• 06:44 — Separate accounts: pros, cons, and tax implications
• 08:28 — Shifting from risk debates to goal-oriented planning

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Episode Tone & Language

The conversation is empathetic, practical, and reassuring. Ann Tergeson’s tone is balanced and understanding, reinforcing that there is no “single right answer.” The dialogue is accessible, offering relatable scenarios and actionable steps without jargon.

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Useful For:
Couples approaching (or in) retirement who are seeking strategies for navigating financial disagreements, as well as anyone interested in practical, real-world advice from financial professionals.

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Transcript

[Small Business Owner]

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[Electronic Payments Coalition Representative]

Tell Congress, stop the Durbin Marshall money grab for corporate megastores paid for by the Electronic Payments Coalition.

[J.R. Whelan]

Here's your money briefing for Thursday, May 27th. I'm J.R. whelan for the Wall Street Journal. Everyone wants to have enough in their retirement savings to live comfortably in their post working years. But when a spouse or partner is involved in retirement planning, things can get tricky. Disagreements can erupt about how to invest those funds for maximum growth.

[Ann Tergeson]

When you're in retirement, you're actually having to tap into that nest egg and you're seeing the value go up and down, particularly as it goes down. And you're also drawing money out. That can be really anxiety provoking.

[J.R. Whelan]

That's our retirement reporter, Ann Tergeson. She's been talking with financial experts about how couples can work together to preserve their financial future. She'll be here to talk about it after the break.

[Small Business Owner]

Access to affordable credit helps me pay my employees, but I don't really need it.

[Advocate for Durbin Marshall Credit Card Bill]

Inflation is killing me, but who cares? Big retailers are making record. Prof. That's why we support the Durbin Marshall credit card bill.

[Small Business Owner]

See banks and credit unions help small businesses make payroll. This bill would cut the vital resources

[Advocate for Durbin Marshall Credit Card Bill]

they need while increasing megastore profits. They deserve it, don't they?

[Electronic Payments Coalition Representative]

Tell Congress, stop the Durbin Marshall money grab for corporate megastores paid for by the Electronic Payments Coalition.

[J.R. Whelan]

As couples approach retirement and a fixed income looms on the horizon, every dollar in the retirement savings is important, but what if there's disagreement over how to invest their savings? Our retirement reporter, Ann Tergeson has been talking to financial advisors about this and she joins us now to discuss. Anne, thanks for being here.

[Ann Tergeson]

You're welcome.

[J.R. Whelan]

So, Ann, let's talk about what's really behind many of these disagreements couples have about investing their retirement. What are the flashpoints that often spark disagreements?

[Ann Tergeson]

I think, you know, given the volatility that we have seen recently in the markets, I think that, you know, sometimes you have a situation where the risk tolerance of one spouse doesn't match the risk tolerance of the other. And when markets turn volatile, particularly when people are in retirement and they need to draw down their nest egg, volatility in the market can be more anxiety provoking. And so when risk tolerances don't match, then you can see situations where people maybe argue or they feel. One feels, we really should do this, and the other feels, no, we should do that.

[J.R. Whelan]

And I want to ask you, you actually saw this play out with your own parents. Can you tell us about that?

[Ann Tergeson]

Well, one of the two had a much higher risk tolerance than the other. And so I remember in particular in 2008, which was a really difficult situation for everybody, they really disagreed. One of them wanted to bail out of stocks entirely, and the other one basically wanted to stick to the agreed upon asset allocation and just to continue buying stocks. Because when the stock market goes down, then, then you have an opportunity to buy at lower prices to keep your overall portfolio in line with your asset allocation.

[J.R. Whelan]

Now, retirees being on a fixed income, money going up and down can really mean a lot to them. And in the choppy stock market that we're in, they can see those balances go up and down. And I would imagine that's firing up a lot of the conversations that you're talking about.

[Ann Tergeson]

Yeah, I think that certainly when you're working and maybe you're 20 years from retirement, 15, 30, this sort of up and down can also be anxiety provoking. But you always have in the back of your mind, well, this is a moment in time, and if I keep contributing and kind of stay the course, I should be okay in the long run. But when you're in retirement, you're actually having to tap into that nest egg and you're seeing the value go up and down, particularly as it goes down, and you're also drawing money out. That can be really anxiety provoking.

[J.R. Whelan]

Now, you've spoken to financial professionals who work with people in situations similar to what your parents went through in terms of differing views on managing retirement savings. What do they say about how couples can start finding their way to some sort of an agreement?

[Ann Tergeson]

Well, you know, there's really no right, single right answer. It's something that people often just, if they're working with a financial advisor, you know, I think generally the way they start is they might give each person a questionnaire that kind of assesses their risk tolerance. They might look back on how each person has behaved during past market declines. But generally the idea is that you should talk about risk tolerance and whatever experiences are behind that inform it. In some cases, it goes back to somebody's childhood, or maybe there was an incident involving the family they grew up in where they learned a lesson about the markets being risky or not risky, even just talking about it maybe gives you a greater appreciation for why maybe your spouse is having more anxiety than you are.

[J.R. Whelan]

And then after that, what are some of the potential solutions that couples might

[Ann Tergeson]

consider in terms of actual ways to manage having different risk tolerances? Again, I think the obvious solution is to kind of meet in the middle. So if you have one spouse who has prefers, like a more conservative asset allocation that leans heavily towards bonds, but the other one prefers a more aggressive allocation that leans heavily towards stocks, then the solution might be to meet in the middle at 50, 50 split or something like that, which is fine. But there are ways within even a meet in the middle kind of strategy to make each person feel a little bit more comfortable. Like, for example, if somebody's really risk averse, maybe they want to have a couple years worth of spending money locked up in cash. And so then you can look at the rest of the portfolio and maybe you make a concession to the more aggressively minded spouse by maybe instead of going 50, 50 in the rest of the portfolio, maybe 60, 40 to 60% in stock. So there are ways that you can sort of meet in the middle, but also kind of manage the portfolio in a way that would give each spouse something that they particularly value.

[J.R. Whelan]

Got it. Now, what about just having separate accounts where each person manages some of the retirement funds? What do financial experts say about that?

[Small Business Owner]

Right.

[Ann Tergeson]

So that's something that actually, you know, now that, you know, it's kind of the norm for both spouses to be working, that that can come up more and more often. And I think, you know, when we're working and have our own 401k, we're sort of inclined to sort of each manage our own money, or at least some couples do it that way. And so when you have differences of opinion on risk tolerance, that is, one solution is that each spouse will sort of just continue to manage their own money as their own separate pot and they don't necessarily coordinate. That has some real pros and cons. If you have differing amounts, then the person who has the larger amount in effect has more control over a greater share of the whole. And if you don't really think in terms of the whole, maybe you can make suboptimal decisions. For example, it's generally more tax efficient to have the bonds in the retirement accounts because you don't owe tax on the dividends and interest as they accrue. You only owe tax when you take money out of these portfolios. So it can be a very tax efficient way to hold bonds. In a retirement account, if one person is managing the retirement account, the other person's managing the taxable account. Sometimes you have the bonds in the taxable account. That's not very tax efficient. So it's fine if people want to do it separately. But I think it's also important to think about how the money's being managed as a whole and trying to make sure you maximize the efficiency of that, which can be difficult if you're each focused on your own separate pot of money.

[J.R. Whelan]

Okay. And so stepping back for a moment, is focusing on risk the right way to approach this whole question, or is there another way of thinking about it?

[Electronic Payments Coalition Representative]

Right.

[Ann Tergeson]

So one of the other strategies that some of the advisors I spoke to mentioned was just sort of trying to take the focus off of this issue of risk tolerance. Anyway. I mean, for one thing, risk tolerance can change over time. I mean, certainly as you get older, sometimes people get more conservative minded in terms of what they prefer in terms of their investments. But the other reality is that when you're in the middle of a bull market, people can be more inclined to think in terms of stocks not being volatile. They'll think that stocks are safer than they would think during a bear market where they might perceive stocks as really dangerous or high risk. So some advisors recommend just not focusing on the question of your overall tolerance for risk, but instead trying to divide up your portfolio so that you have specific buckets of money that are tied to specific goals. So, for example, you might have some money tied to college savings. Well, you know, if you've got a 17 year old, you need that money. Next year you're going to invest that pot of money pretty conservatively. You know, your retirement savings. Maybe you're not going to retire for 15 years, so you can afford to take more risk in that pot of money.

[J.R. Whelan]

All right, that's Wall Street Journal retirement reporter Ann Tergeson. Ann, thanks for coming on the show.

[Ann Tergeson]

You're welcome.

[J.R. Whelan]

That's your Money briefing. I'm J.R. whalen for the Wall Street Journal.

[Electronic Payments Coalition Representative]

This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. But what policy changes should investors be watching? Washington Wise is an original podcast from Charles Schwab that unpacks the stories making news in Washington right now and how they may affect your finances and portfolio. [e-mail] WashingtonWise.