How Money Can Affect Relationships: Both Negative and Positive

How Money Can Affect Relationships

We all know how money can affect relationships negatively. After all it’s one of the most common things that couples argue about. However, have you ever thought about how money can affect relationships in positive ways? Whether for good or bad, communication is the key to dealing with money in your marriage or primary relationship.

How Money Can Affect Relationships Negatively

Money is one of the biggest sources of conflict in most marriages. Even before you get married (if you choose to do so), money can rear its ugly head in your relationship. Here are just a few of the most common ways how money can affect relationships negatively:

  • When one of you out-earns the other, it can lead to feelings associated with a sense of power imbalance. This can also relate to strain over ingrained beliefs about gender roles in the home.
  • One of you has significantly more debt than the other which creates arguments. Similarly, if you have different viewpoints about how to deal with debt, then you could end up resenting one another.
  • You have different money personalities. For example, one is a spender and the other a saver. If you don’t respect each other’s approaches, then you could have a problem.
  • If you haven’t discussed your long-term goals then you might not be on the same page financially. This can show up in arguments over day-to-day spending.

Money is rarely just about money. People come to the topic with a lot of emotions, thoughts, and behaviors. Many of these things have less to do with money and more to do with beliefs about career, identity, family, power, security, and love. If you’re not discussing the underlying issues, then you can end up fighting about money. Since money isn’t the true issue, the problem is never resolved.

How Money Can Affect Relationships Positively

It’s easy to become afraid of dealing with money in your marriage. However, it helps if you think about how money can affect relationships positively. If you have open, authentic communication, respect one another, and are willing to compromise, then money can actually be the source of some beautiful things in your relationship.

For example, one of you may become physically or mentally ill and thus unable to work. This could add up to a lot of medical debt as well. If you approach this setback in a healthy way, then it can be a period that strengthens your relationship.

The spouse that is able to carry the couple financially during this time may feel like they have a small bit of control during a scary time. The spouse that is ill may experience a kind of relief that gives them space to heal. It’s not an easy time, but it doesn’t have to be one in which money is the enemy.

It’s All About Communication

There are several similar scenarios that have the potential to be negative but could also be positive for your relationship. More than anything else, though, you can work together to use the vehicle of money as the starting point to discuss those deeper issues. If you recognize that it’s not really about money, then you can dig into the deeper emotions and issues at the core of the problem.

For example, let’s say that you’re fighting about one person working while the other is a stay-at-home parent. You fight about the lack of money or how money is spent. Underlying issues might include:

  • Fears by the stay-at-home parent that they aren’t doing enough to support the home
  • The stay-at-home parents feelings of losing their financial autonomy and what that means about their identity and life options
  • Hesitation by the stay-at-home parent to express times they’re dissatisfied with staying home because they’re “lucky” not to have to work
  • Fear by the working parent that the children are closer with the other parent
  • Resentment by the working parent that they have to be at work all day
  • Emotions about the power dynamic that might relate back to childhood issues

Those are just a few of the things that might be unsaid when fighting about money. If you can discuss money practically and respectfully, then you can make space to deal with those other issues. It’s all about communication. The more you learn to talk about money with each other, the more ways you’ll see how money can affect relationships positively.

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Pros and Cons of Taking Early Social Security

early social security

You can begin taking early social security payments as young as age 62. Most people start taking it around age 66. Some people believe that you should wait until age 70 if you’re in a position to do so. What’s the right answer? It’s hard to say. There are some big pros and cons to taking that money early. Understanding those can help you make the right decision for your own retirement.

What Happens When You Take Early Social Security?

Generally speaking, you’re able to get your “full retirement” when you reach around age 66. (This varies slightly depending on individual circumstances.) If you take that money early, then you don’t get the full amount. Therefore, your monthly Social Security payments are lower than they would be if you waited.

On the other hand, you start to receive that money sooner. If you reach age 62 and really need that Social Security income, then you might find that it’s worth it to take the lower monthly amount. You’ll start getting that monthly check years before you would if you waited until reaching full retirement age.

So, in terms of the most basic pros and cons, taking your money earlier means:

  • The benefit is that you start receiving your money sooner.
  • The drawback is that you get less money per month throughout your retirement.

Social Security May Change in 2035

The Motley Fool makes a great case for taking early Social Security, which is that big changes may await when it comes to social security. In fact, Congress may cut benefits by 23% for all people receiving social security from that point forward. Therefore, if you’re thinking about retiring between now and then, it might be worth it to take the money early.

Yes, you’ll get less per month when you do that. However, you’ll earn the full “lesser” amount every year up until 2035. The longer you wait to start taking payments, the less time you have to accrue money before that potentially huge Social Security cut.

Of course, we don’t actually know for sure what decision Congress will make. There’s a chance that they won’t make that cut. Or it might not be as big. Therefore, taking early Social Security is a risk. You may opt for the lesser monthly amount now, hoping to accrue more before the big cut, only to find out that the big cut doesn’t happen. You’ll still get the lesser monthly amount. It’s not like you can go backwards in time and “take back” your decision to take early Social Security.

So, taking the money early means:

  • You might get more money overall by cashing out as early as possible before a big cut.
  • If the big cut doesn’t happen, then you might not have made as much as you potentially could have.

We Don’t Know How Long We Will Live

If you had a crystal ball then it might be easier to decide when to take your money. If at age 62 you knew that you only had ten years left to live, then obviously you would take early Social Security. On the other hand, if you knew that you were going to live another thirty years, then you might opt to keep on working until you could completely max out that retirement income.

Unfortunately, there’s no way to know. So the pros and cons really depend on factors that we can’t entirely know or control. All that you can do is make the best decision possible with the information that you have as you reach retirement age. Consider your health and likely longevity based on family history and other factors. Think about how much money you’ll likely get if you take early Social Security vs. the full amount. Weigh what would happen if Congress cut that amount in 2035. Then do your best to decide how the pros and cons balance out.

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5 Financial Downsides to Retirement

retirement

Retirement sounds terrific. You finally get to take a break. You’ve worked all of your life for this. However, is it really all that it’s cracked up to be? There are many downsides to retirement that people don’t always talk about. In fact, there are some big financial downsides to retirement. It’s important to be aware of those before you retire. Here are the five biggest retirement problems:

1. Inflation Keeps Rising

The number one financial problem that people face in retirement is inflation. The cost of living just keeps going up. It doesn’t matter to the world that you’re getting older and living on what may be a fixed income. The price of milk and utilities will just keep increasing.

LIMRA reports that retirees suffer from the effects of inflation even when inflation rates are relatively low. They demonstrate that just a 2% annual inflation rate could cause the average retiree to lose nearly $74,000 within a 20-year retirement period. If you haven’t accounted for inflation when planning for retirement then you could end up financial trouble.

2. Retirees Pay a Lot in Taxes

Many people assume that they’re taxes will go down in retirement. After all, you’re not working as much, so you’re not going to earn as much, right? Wrong. Many people actually earn as much or more after retiring, especially if they planned ahead financially for secure retirement.

Unfortunately, that means that you have to keep paying taxes. You don’t have an employer taking those taxes directly out of your paycheck anymore. Therefore, you’re going to have to deal with that yourself. Moreover, remember that your 401(k) money, which wasn’t taxed when you set aside, is taxable income when you use it in retirement.

3. You Have to Make the Money Last

Here’s the obvious but important thing about retirement: you’re spending money and not earning any. Ideally, you’ve created some kind of passive income to help you bring some money in during retirement. Mostly, though, people retire and use what they have in savings. People are living longer and longer after retiring. The longer you live, the more you have to make that money stretch. Therefore, you might want to think twice about retiring early.

4. Old Age Is Expensive

Not only do you have to make your money last. Not only do you have to consider the problem of inflation. But you have to think really seriously about what life is going to cost you after retirement, particularly as you get older and older. So many costs go up as you age. Your healthcare needs rise. You may begin to need help through in-home care or assisted living.

These costs are not cheap. MSN News reports that an average 65-year old couple requires more than one quarter of a million dollars for healthcare costs alone. A private nursing home costs more than $100,000 per year. When you’re young, you really can’t fully imagine just how expensive it is to get old. Once you’re in retirement those costs can become a very harsh reality.

5. You May Have To Keep On Working

Social security alone isn’t likely to support you. Your own savings and investments might not be enough to cover these costs. Therefore, you may have to keep on working. I personally know many people who retired from their long-term full-time jobs only to have to secure new employment a few years after retirement. Therefore, retirement may simply not be what you expect.

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