Many couples find it challenging to have productive conversations about investing, especially for so-called “blended families,” a family with children from current and previous relationships.
Today, blended families account for more than one in 10 Canadian households.1 Each has unique values as well as special considerations around investing and retirement.
Consider these blended-family tips that can help your new family merge financial values and goals for a future that everyone can look forward to.
Out with the old goals and in with the new
If you’re going to start a new life with someone, you’ll have to reimagine your future, too. While many of your goals may be the same in your new relationship as your old – travel, for instance – there may also be a lot of differences. For instance, you might have to factor in spending time in retirement with not just your kids, but also your new partner’s children, who may live in different cities. With many points of view, it can be helpful to learn everyone’s expectations so you can better balance their needs with yours and your partner’s.
Bring the family, and its finances, together
One of the most difficult aspects of a blended family is bringing the family’s finances together, as spouses typically bring previously earned assets into the relationship. It can take significant time to determine how to pay for the blended family’s expenses — you usually need to get into a rhythm before figuring out whether, for instance, a joint account makes sense or how expenses should be divvied up.
It might take even longer to figure out how to save together. Maybe one of you likes to spend more than save, or perhaps you have different ideas about how to save. Like parenting, finances work best with a united front, so it helps to have open and regular conversations with your new partner about your savings plan.
Navigate arrangements with ex-spouses
One area of complexity for blended families is figuring out who is financially responsible for a step-child’s care. In some cases, you may be expected to pay for everything, potentially on top of alimony payments to your former partner. Some families divide expenses evenly or have certain spouses pay for different parts of the child’s life, say medical bills, camp or even college. Sorting these responsibilities out can be tricky, especially if your new spouse has different arrangements with their ex or if they need to chip in to cover some of those costs, too. A Financial Advisor can help blended families budget and have these kinds of money conversations.
Develop an estate plan for the whole family
Estate plans are always important, but they’re especially critical in blended families, in which dividing assets and possessions – between kids, stepchildren, new spouses and potentially even former spouses – can get complicated. You may also have assets from your previous relationship and from your current union to divvy up. It’s important to carefully plan, document and communicate your wishes and intentions. Consider revisiting previous documentation, as well. For example, you may want to revise your estate planning documents to include your new spouse and step-children.
Have honest discussions about retirement
As important as it is to talk to your new partner about your lifestyle today, it’s also helpful to discuss what you might want your lives to look like when you’re retired. Will both of you stop working at the same time, or will you stagger your retirement (or even work part time for a period)?
Don’t forget the fun stuff: Do you both want to travel, or maybe purchase a vacation home? How do you see yourself spending time with children and grandchildren?
Long term, you’ll also want to think about caring for yourself and your new spouse as you age. What extra services and support might you both need if your health changes?
Central to these conversations is thoughtful consideration of what you’ll need today and tomorrow.
Ultimately, creating an integrated and aligned blended family doesn’t happen overnight. There are a lot of viewpoints to consider, and those will likely evolve as you and your spouse build a new life together. As time goes on and children and relationships age, make sure to revisit those goals so you can plan for a stronger future together.
