The retired couple's guide to livin' the dream

(Money Magazine) -- Question: My husband and I have been happily married for 28 years. Careful spending and sound planning over time has provided us with a very comfortable financial future. Although we're compatible in many ways, our outlook differs when it comes to enjoying our money. I'm more of a saver and I hate to shop. I'm already retired, and when my husband retires in a year we'll begin drawing on our retirement savings. Can you suggest some tips on how we can communicate effectively about spending our money? How do we assure that we'll both have the independence to decide how we want to spend "our share" without judgment? --Margaret M.

Answer: The fact that at least one of you has begun to think about how you'll get along once you make the transition from the work-a-day world to retirement is a hopeful sign.

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Walter Updegrave is a senior editor with Money Magazine and is the author of "How to Retire Rich in a Totally Changed World: Why You're Not in Kansas Anymore" (Three Rivers Press 2005).

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For many couples this important new phase of life is something that just happens without much real planning about how they'll handle their money in retirement or deal with the adjustments each might have to make now that their schedules and finances may be radically different than during their careers.

A 2009 Fidelity Investments survey of 502 married couples found that only 38% report making decisions together about their retirement finances and that large numbers don't agree on such basics as what type of lifestyle they expect to live after retiring.

So I applaud you for wanting to open up the lines of communication between you and your hubby now rather than waiting until you've both left your jobs.

But if you really want to improve the chances of you and your husband enjoying a retirement that's financially secure and fulfilling for both of you, I think you need to talk about more than just how you'll spend your money. You should take a comprehensive look at how you want to live in retirement and how your wishes jibe with financial reality. Call it a Retirement Dream Reality Check.

Here's how to do that in three steps:

1. Envision your retirement. You and your husband should spend some time discussing what you would like to do once you're both retired. Freed from the shackles of work, you're going to have a lot more time on your hands. Think about what you'll do with it.

I'm not talking about generalities like kicking back and taking it easy. I'm talking about specifics: Do you want to travel? If so, how often and where? Do you want to spend more time pursuing a hobby or avocation that's long been important to you, or maybe start fresh with a new one. Might you work part-time to stay engaged? Do you plan to live year-round in your current home --or maybe split your time in different parts of the country? And are there activities you think you'll participate in on your own? It would be a good idea to let your spouse or significant other in on that.

You and your husband can engage in these sorts of discussions on your own. Or you can attend a program or seminar specifically designed to help you map out the next chapter in your life, such as the Paths to Creative Retirement Workshops offered by the North Carolina Center for Creative Retirement.

The key, though, is to share ideas and brainstorm so that each of you has a sense of how your partner sees the next phase of life unfolding. The more you know of each other's hopes and dreams, the better you'll be able to plan to accommodate one another.

2. Assess your financial resources. Dreaming is nice, but you've also got to make sure your plans are tethered to reality -- that is, ascertain whether you can afford the type of lifestyle you prefer.

To do that, start by taking inventory of your finances. Tote up all you've got stashed away in 401(k)s, IRAs and other retirement accounts, investments in brokerage and mutual fund accounts, savings accounts -- and don't forget other resources such as Social Security, the cash value of any insurance policies and the equity in your home. To get a sense of how much sustainable income your savings might generate, you can check out a tool like T. Rowe Price's Retirement Income Calculator.

This is definitely an activity you and your husband want to do together, as it's important that both of you understand what sort of standard of living is realistic given your financial reserves.

You may very well find that your savings and other resources can't support all of the activities you had planned to do as a couple or separately. In that case, you can talk about cutting back or eliminating specific ventures or maybe paring back overall.

Or, you might decide that you and your husband are better off working a few more years so that you can fund a retirement that's more to your liking. But until you've actually gone through steps one and two, you can't really know whether your desired retirement lifestyle is within your reach.

3. Collaborate on (some) spending. Once you're reasonably sure you have the financial wherewithal to live the way you want in retirement, you can focus on how to manage your spending so that neither of you feels he or she is being short-changed on your retirement resources.

Given you've already got more than a quarter century of marital bliss behind you, I doubt that you and your husband are going to get into tiffs over basic expenses like the mortgage, health care, groceries, insurance costs, etc. They're pretty much necessities that will come out of a communal pot.

But it's the category of discretionary spending where things have the potential to get hairy. There are any many ways to deal with such non-essential spending, but one is to agree that you both have to agree on spending over a certain level. That level will depend on what you consider a significant amount of spending, but something on the order of $500 to $1,000 might be a reasonable starting point.

Or you might agree to cede spending decisions in a particular area to one spouse. For example, I'm a bit of a cheapskate when it comes to traveling. I figure I spend very little time in the hotel room during vacations, so as long as it's clean, a no-frills room is fine with me. Let's just say my wife feels differently. So I pretty much defer to her on travel accommodations, knowing she'll find something to her liking that won't bankrupt us.

As for smaller amounts of discretionary spending you may each want to do on your own -- clothing, lunches and dinners with friends, that sort of thing -- you might want to agree on a monthly amount you can each go through no questions asked. The size of that figure will depend on how much cash you can lay out after paying for essentials and larger items. But whether it's $100 a month, $200 or some other figure, what's most important is that you allow one another the option of spending some money without fear of judgment or recrimination.

Will following these three steps totally eliminate potential sore spots? Of course not. As someone who hates shopping, you may not understand your husband's pressing need to buy the latest electronic gizmo. (Just as he may question why you're concerned with saving at this point in your life when you've earned the right to enjoy what you've already saved.)

But if you go into retirement with the same spirit of cooperation that's kept you and your husband happy the past 28 years, you should be able work it all out.