Money and love: How successful couples split the financial chores
Posted on 14 February 2008
By Mark Miller
Permanent URL of this article: http://retirementrevised.com/column/money-and-love-how-successful-couples-split-the-financial-chores
Money can’t buy me love, wrote Lennon and McCartney. But loving couples could be doing a better job managing their money.
So concludes a new study of couples’ financial management styles-and how they can get the best retirement planning outcomes. Released on Valentine’s Day, the study from Hartford Financial Services Group and the MIT AgeLab study reflects interviews with more than 800 pre-retirees and retirees age 45 and 74 who were married or living with a partner.
Say you don’t care too much for money? If so, you’re typical.
For about a third of American couples (36 percent), one spouse is the dominant financial manager. These so-called “drivers” (17 percent of respondents) handle all the household finances, while the “passengers” (19 percent) are minimally involved or completely hands off.
The partners in just over half of couples (53 percent) share financial management duties. These “joined at the hip” couples don’t split or delegate financial chores, and they make all the decisions together.
The remaining 11 percent have found the financial promised land. These are what Hartford and the AgeLab call “power couples.” In these “divide and conquer” relationships, each partner takes the lead on some aspect of household finance, and a secondary role in other areas.
These shared-management couples registered the study’s best financial outcomes. They were most likely to have a long-range plan that assures the financial security of the surviving spouse, and to have saved at least $750,000 for retirement.
The AgeLab does research on innovation in transportation, health and wellness, aging and longevity planning at the Massachusetts Institute of Technology. The joint study with Hartford aimed to identify the factors that lead to poor financial decision-making in the years leading up to retirement.
“One of the greatest challenges is that our personal agendas are so crowded with daily life that it’s 
hard to engage people on how they will live 20 years out,” said Dr. Joseph Coughlin, director of the MIT AgeLab. “Unfortunately, many people will delegate the financial management to one spouse.”
The study didn’t find men any more likely than women to take the lead on money management. But one of the researchers’ concerns was the impact on women of poor retirement planning. Women tend to have greater longevity than men, and in old age they experience some of the highest rates of poverty among all demographic groups.
“We find many widowed women who face deteriorating financial circumstances,” said Maureen Mohyde, director of corporate gerontology at Hartford. “Income of middle-class women can drop as much as 50 percent when the husband dies, but expenses don’t decline nearly as much. We wanted to look back a few decades to see what could be done to avoid those situations. 
That’s when we started thinking about how couples plan.”
Mohyde wants couples to ask themselves several questions to judge their own degree of preparation:
– What would happen to your household income if you die first, or your spouse does?
– What happens to your household assets if you or your spouse dies following a protracted and expensive illness?
– Are both you and your spouse prepared to step in and manage the finances?
The study showed that very few American couples have good answers to all those contingency questions. We’re either too busy-or too overwhelmed by the complexities of money and investing-to deal with it.
If that sounds like you, the researchers suggest getting some help from a financial advisor.
“If your spouse isn’t up for taking on responsibility for money, then have a third person in the financial relationship,” says Mohyde. “Be sure there is enough participation from both of you so that you both know and trust the adviser. When one spouse dies, there are still two people in the financial relationship who are capable of implementing the plan.”
That may sound like self-serving advice coming from Hartford, which sells retirement products through a network of independent advisors. But on Valentine’s Day, it sounds like pretty good advice … even if you’re 64.
