I had an interesting conversation with a friend a few days ago, and got her permission to discuss it here. She is engaged and I was very pleased to hear that she and her future husband have been discussing how they plan to deal with their finances after they wed. I am not sure of all of the details, just that they seem to have agreed on all but one minor thing – their retirement accounts.
Right now, my friend has her retirement accounts (401k and Roth IRA) set up so that if she dies, the money in the account is distributed equally among her three siblings. As a single woman with no children, I have done the exact same thing with my accounts. While discussing these accounts with her betrothed, she commented that until they have children, or at least until the situations change, she would like to keep it that way.
Clearly, since I’m writing about this, you already know that he did not agree. In his opinion, they should each make the other the beneficiary of these accounts. He did make some good points, one being that changing things now would prevent forgetting to change them later after a child is born.
In her opinion, for the next few years at least, her siblings would benefit the most from the money. Her siblings are in college and high school, while her to-be husband has a good job and a retirement account of his own. Additionally, as they agreed, everything else she owns would go to him in her will (aside from some family heirlooms he has no desire to keep).
I am not sure how they resolved the matter. It wasn’t a huge sticking point between them, she was just surprised that he reacted so strongly to the matter. Additionally, at this point, they’re not talking a huge amount of money. She’s only been in the workforce a few years, and over the past year, her retirement accounts have taken a hit thanks to market fluctuations.
I did think it was an interesting debate. Were I getting married and having this discussion, I don’t know what I would do. As I said, I also have my retirement accounts set up so that my siblings are the beneficiaries, and I know that one of my siblings has done the same (the other is still a college student who I cannot convince to start a Roth IRA).
Anyone want to weigh in?
Megan is a 40-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:
In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance. It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information. It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck. While that was working for me, clearly I needed a better plan.
While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.
Except that’s not what an emergency fund is for.
So I did a lot of research, read a lot of blogs, and decided that I needed a plan. I needed to budget. I needed to know what I was spending my money on. I needed to prepare for the future.
I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way. I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.