Across America, Valentine’s Day sees couples reaffirming their emotional partnership but, like every other day of the year, communicating about their financial partnership is often a much taller task. Long after the cards are exchanged, the challenge still remains to put in place an effective long-term financial plan for many more Valentine’s Days during their retirement years. The Hartford Financial Services Group, Inc. (NYSE: HIG) and the MIT AgeLab teamed up to explore how couples approach their finances and communicate about long-term goals. Today, they unveil results from a nationwide study of pre-retirees and retirees, identify four financial planning styles and share the habits of highly effective planning couples.
Four Distinct Financial Planning Styles
In November and December of 2007, researchers conducted telephone interviews with 837 pre-retirees and retirees between the ages of 45 and 74 who were married or living with a partner. Four distinct planning styles emerged:
- Roughly a third of couples (36 percent) reported that one spouse is the dominant financial manager. Of this group, the “Drivers” (17 percent) handle all financial matters of the household while the “Passengers” (19 percent) are either minimally involved or completely hands off from financial matters.
- Just over half (53 percent) of the respondents said they were part of a couple where both partners are equally involved in all aspects of financial management for the household. The “Joined at the Hip” managers do not divide or delegate financial tasks, choosing to make every financial decision and take every action together.
- A relatively small percentage (11 percent) practiced a division of labor approach. The “Divide and Conquer” managers were part of a couple where each partner takes the lead on some aspects of the household finances and plays a secondary role on other aspects.
“Divide & Conquer”– The New Retirement Planning Power Couple
Of the four financial planning styles, partners who practice a “division of labor” approach to managing household finances reported notable successes that stood out from the other groups:
- “Divide and Conquer” managers were most likely to have prepared a contingency plan to assure the financial security of the surviving spouse (45 percent versus 32 percent for “Joined at the Hip,” 27 percent for “Passengers” and 8 percent for “Drivers”).
- “Divide and Conquer” managers also stood out as super savers (38 percent of this group had saved at least $750,000 for retirement versus 16 percent who had achieved that savings level among “Joined at the Hip,” 25 percent among “Passengers,” and 17 percent among “Drivers”).
- And this translated into a higher reported enjoyment of retirement. “Divide and Conquer” managers are enjoying retirement more than expected (46 percent versus 29 percent for “Joined at the Hip, 23 percent for “Drivers” and 18 percent for “Passengers”).
“A shared management style is an essential approach for couples today,” said Maureen Mohyde, director of corporate gerontology at The Hartford. “However, the couples who seem to have the most success in financial planning for retirement are those who practice a division of labor.” Mohyde notes that couples using the “Divide and Conquer” management style were the most likely to have considered three important questions related to the death of a spouse: how would this impact the monthly income of the remaining spouse; how an expensive illness of the dying spouse would impact the remaining spouse’s assets; and, how prepared is the surviving spouse to manage the household finances when one partner dies.
Dr. Joseph Coughlin, director of the MIT AgeLab, added “Couples using a ‘Divide and Conquer’ approach to managing their money are increasing their capacity to deal with the volume, velocity and complexity of financial decisions today, an environment vastly different from that which their parents faced. ‘Divide and Conquer’ couples were least likely to be overwhelmed. This allowed them to more effectively plan now for their financial future.”
Turning Emotion Into Action: How All Couples Can Become “Divide & Conquer” Couples
“The ability to turn emotion into action is what distinguishes our retirement ‘power couple’,” said John Diehl, certified financial planner and director of The Hartford’s Retirement Solutions Group. “According to our research more than 50 percent of couples are already collaborating on their finances. By taking a few additional simple steps to plan for each other’s future financial well-being, we can help them avoid issues later in life. A trusted financial advisor can help.”
The research showed that “Divide and Conquer” couples are significantly more likely to seek the assistance of a professional financial advisor (72 percent of those surveyed versus 59 percent of those who are “Joined at the Hip,” 44 percent of the “Drivers” and 56 percent of the “Passengers”). The Hartford recognizes the critical role the financial advisor plays in helping to facilitate communication and coach a couple. The Hartford’s gerontology group will incorporate findings into financial advisor and client education programs that are administered by the firm’s twenty retirement solutions consultants. The programs are designed to help financial advisors develop for their clients more effective communication and financial contingency plans at an earlier stage in the planning process.
Special Conference Call to Discuss Power of Two Survey Findings
Hartford gerontologists and retirement experts along with special guests from the MIT AgeLab will present findings from the “Power of Two” survey in more detail and answer any questions in a special conference call for the news media on Thursday, Feb. 14 from 2-3 PM eastern time. Media organizations are invited to join the call at 1-888-781-3339 (ask for “The Power of Two.”)
About The Hartford and MIT AgeLab
The Hartford is one of the few companies in the United States with in-house experts on business and aging. For over 23 years, The Hartford has employed gerontologists to work across the company’s insurance and investment business lines to help develop industry leading programs and services for the mature market. The Hartford has enjoyed a research collaboration with the MIT AgeLab since 1999, when MIT started working with the company’s property and casualty division. In 2006, this partnership was extended to The Hartford’s retirement initiatives. The purpose of the collaboration is to gain greater insight and understanding into the challenges facing Americans as they age, and to apply this understanding to the delivery of financial planning products and services to meet the needs of its customers. The AgeLab’s multi-disciplinary team has developed unique methods, facilities and data that place it at the forefront of innovation in transportation, health and wellness, aging and longevity planning. The AgeLab’s Internet address is http://web.mit.edu/agelab.
The Hartford, a Fortune 100 company, is one of the nation's largest financial services and insurance companies, with 2007 revenues of $25.9 billion. The Hartford is a leading provider of investment products, life insurance and group benefits; automobile and homeowners products; and business property and casualty insurance. International operations are located in Japan, Brazil and the United Kingdom. The Hartford's Internet address is www.thehartford.com.
HIG-L
Some of the statements in this release may be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. We caution investors that these forward-looking statements are not guarantees of future performance, and actual results may differ materially. Investors should consider the important risks and uncertainties that may cause actual results to differ. These important risks and uncertainties include, without limitation, those discussed in our Quarterly Reports on Form 10-Q, our 2006 Annual Report on Form 10-K and the other filings we make with the Securities and Exchange Commission. We assume no obligation to update this release, which speaks as of the date issued.
This information is written in connection with the promotion or marketing of the matters addressed in these materials. These materials are not intended to provide financial planning advice. As with all financial planning matters, you should consult a professional for advice.
“The Hartford” is The Hartford Financial Services Group, Inc. and its subsidiaries.
Contacts:
Tim Benedict,
860-843-5150
timothy.benedict@hartfordlife.com
or
Julia
Green, 860-843-6022
julia.green@hartfordlife.com
