10 general rules for a secure retirement for women (Part 2)
To what extent should you make decisions on your retirement with your spouse? Read some of our thoughts on the best practices for financial planning for couples.
By Wouter Fourie (CFP®)
Wouter Fourie is the CEO of Ascor® Independent Wealth Management. He is past winner of the FPI Financial Planner of the Year competition and the co-author of The Ultimate Guide to Retirement in South Africa and, Secure your retirement.
When confronted with the hard realities of available retirement money, death, divorce, or disability, it always makes sense to talk openly to your spouse timeously and discuss the exact point of reference and standing for both of you. Continuing from part 1 of the general rules for a secure retirement, here are five more:
Honesty is a key element in any retirement discussion, therefore rule six should make relationship histories clear and transparent. In the event of you or your partner having been married before, establish the financial consequences of the divorce(s). Be specific in establishing whether your or your partner’s former spouse has a right to any part of your spouse’s retirement savings, or even received a portion of that retirement already. It is crucial to know if a previous spouse is still a dependant or has dependant children who will be entitled to a share of any group life and disability benefits.
Rule seven is to clarify “what is mine is mine”. What is yours must remain so and if you are helping a partner, for example in funding a business, make it a repayable loan rather than a gift, particularly when retirement savings are involved. Do not see your accumulated retirement funds as a standby source of family financing, unless in dire need. It is extremely dangerous and irresponsible to cash in your retirement funds, where it is possible, to fund some venture, and it will have damaging tax consequences.
Keeping your assets in your name is rule eight and is especially valid if your spouse runs their own business. Securing major assets – like your home and car – in your name or in the name of a trust of which you are also a trustee, ensures that creditors cannot attach the assets if the business venture falls apart. By exposing your assets to creditors, you may find you will have to use your retirement savings as a financial lifeline, something you do not want to do as you will possibly never recoup those losses.
Rule nine is to get independent advice, preferably a different financial planner from your partner’s to avoid a conflict of interest.
Finally, rule ten is to be in control. A sure-fire way towards a calamity is an attitude of “I am bad with figures, so I let my partner do all those things for me”. Stay fully involved in all your family finances, as there are numerous ways that assets can be hidden from spouses using instruments such as trusts and nominee companies. Always heed these words, even if you have stars in your eyes and love in your heart: If someone has malicious intent and you have shown no interest in managing your affairs, you will pay a financial penalty and will possibly endure a penniless retirement.
Please visit www.retirementplanning.co.za for more information on the books “The Ultimate Guide to retirement in South Africa” and “Secure your Retirement”, which was written by Wouter Fourie and his co-author, Bruce Cameron.
This article is based on a section in the top-selling book, The Ultimate Guide to Retirement in South Africa, written by Wouter Fourie and Bruce Cameron. For more information, visit www.retirementplanning.co.za.
This article first appeared on moneyweb.co.za at https://www.moneyweb.co.za/financial-advisor-views/10-general-rules-for-a-secure-retirement-for-women-part-2/
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