In a Couple? Aim for Real Financial Independence, Not Financial Dependence

I’d like to share something I’ve never talked about here before, about when I really felt financially independent.

It wasn’t when we hit “technical FI,” it wasn’t when we hit our original magic number, it wasn’t when we paid off the house and it wasn’t even when we said goodbye to our careers.

It was when I realized that we had enough saved that, if we had to split things up, my share would make me financial independent on my own, and Mark’s would make him FI on his own.

I hadn’t realized it before then, but up until that point, I wasn’t actually financially independent, I was financially dependent. So was Mark. We were both financially dependent on the marriage. We were FI together, but not separately, and that’s a very different thing.

Psst. UPDATED details on the New York City meetup THIS SATURDAY at the bottom of the post! (And details on all planned meetups always live in the sidebar.)

As a couple we had been FI for a while. The home stretch of our journey was mostly about padding our numbers to insulate us against sequence risk, because we always planned to work until the end of 2017, and we just happened to get ahead of schedule on saving thanks to market tailwinds and more aggressive saving on our part.

But it’s like any stress you only realize you’d been carrying around after you feel it lifting: I think I’d always been a tiny bit anxious about walking away from a great career knowing that what Mark and I were doing was a little like roping together to climb up a glaciated peak without fixed anchors. In other words: If one person falls, you both fall. Mountaineers call that style of travel a suicide pact. That’s unnecessarily morbid for what we’re talking about here, but it felt naïve not to recognize that there was at least some element of mutually assured destruction in retiring early in a state of coupled financial dependence rather than true financial independence.

Think about all the worst case scenarios that most of us on the FIRE path plan for. We’re all thinking ahead to massive health care inflation, parents are having similar thoughts but around the cost of college, we’re building in contingencies for natural disasters or extended periods of stagflation, and we’re diversifying our assets and building up cash cushions to ride out proverbial storms.

Related post: Death and Divorce and Unhappiness, Oh My! Might Early Retirement Actually Be Bad for Us?!

But how many of us are planning for what we’ll do if our marriage or partnership dissolves? And even though divorce rates for those married in the 2000s are trending below rates for those married in the 1990s and earlier, divorce is still happening to more than a third of all marriages.

Put another way, if you’re married, it’s more likely that you’ll get divorced than that you’ll need to trigger your contingency plans. It’s way more likely that you’ll get divorced than that we’ll have a lost decade of stagflation.

Before we hit the point that put us at true, independent financial independence, I had an answer for this: make a pact that we won’t get divorced. And not that we think that’s even a possibility. Mark and I feel lucky to have a strong marriage, and we work hard to be good communicators with and partners to each other. Thinking about the possibility of divorce doesn’t mean we think it’s likely. We just know the odds and don’t want there to be a massive, willful blind spot in our financial plan.

My most recent post about all of this, from almost a year ago, was about couples creating a pre-FIRE agreement, in essence a set of things you agree to do together to keep your relationship strong and healthy, so that divorce doesn’t even begin to look like the best option. On our list were action steps like:

• Commit to getting relationship counseling every few years as “preventive maintenance,” whether it feels necessary at that time or not.
• Commit to seeking out counseling in tough times if we aren’t making headway on our own, before things feel unsalvageable.
• Commit to listening more whenever it’s clear that we aren’t seeing eye to eye.
• Accept that there will be times that are tougher than others, and think long term rather than giving up on each other or the marriage.

And we’re still 100 percent committed to all of that. We believe marriage is an investment that you must tend, and while cutting out all the job stress and constant work travel certainly makes that tending easier, it doesn’t eliminate the task altogether. Nor does doing those things guarantee that a marriage will last forever. It’s a lot like health: we can do everything right and increase our odds of good outcomes, but ultimately it’s not entirely within our control.

But I wrote all of that before we shed our financial dependence on each other and realized that, even with that pre-FIRE agreement made, I still had a tiny bit of lingering stress from knowing that we could end up in a bad spot financially if we split up. My parents divorced and it caused definite financial anxiety for me and my dad, so I knew exactly where this fear came from, but that didn’t make it any less real.

Now, having been on the other side of it, of knowing that I’ll be okay whether it’s with Mark or solo, I have to say that this version of financial independence feels way better. Much freer, but in a totally relationship-affirming way. It’s sort of like work after you become financially independent: you know it’s work you’re 100 percent choosing to do, and not work you’re doing even just a little bit because you need the money. We no longer need each other financially, and we’ll never even have to entertain the thought of whether we’re just staying together because we can’t afford to split up. We know that we’re here entirely by choice, which is so freaking romantic. What an incredible privilege, not to mention what a huge weight off our marriage!

Ways Couples Can Be Fully Financially Independent

If you’ve just gone through the trauma of a divorce, the last thing you’re going to want to have to do is try to scrape your way back into the job market after years or even decades of absence, because your finances no longer work with the economies of scale you enjoyed as a couple suddenly gone. Or, perhaps worse, to stay in a marriage that can’t be repaired because you can’t afford to split up.

So build this as a contingency into your plan. If you’re retiring early as a part of a couple, do everything you possibly can to keep that partnership strong and fun, but also make sure you’d both be okay if things don’t work out between you.

That can take several different forms:

Save enough to be independently financially independent – This is the highest bar, requiring the couple to save what might amount to significantly more than they need together. For financially conservative or money-fearful folks, this is the most reassuring option, but it almost certainly means working longer than you might otherwise need to, which will be a deal-breaker for plenty of other folks. Fortunately, it’s not the only option.

Make sure you both maintain marketable skills and job market connections – The tale of the older woman trying to find a minimum wage job after getting divorced is well worn at this point, because it’s so common, especially among Boomers and Gen X couples in which the wife in a hetero couple stayed home with the kids while the husband worked to support the family. The model might have worked great for them while they were together, but when they split, one of them is much more likely to be okay financially than the other one is. If you’re a couple going into early retirement with some financial dependence on one another, make sure you both have job skills you can market so that you’ll both be okay if you need to find work in the future, and maintain some lines of communication to people who could help you get back into the game, should it ever come to that.

Build your own retirement side hustles – If you have stayed home with kids, for example, or just have no desire to maintain your skills in your old career field, another option is for both partners to build side hustles in retirement, even tiny ones, that could be scaled up if you really needed to make some money. You’re going to have much more free time in retirement anyway, along with the urge to fill it with meaningful projects, and figuring out how you could make even a little money from one of those projects becomes a lot more fun once you don’t need it. But use the knowledge that you might one day need to motivate you to get that side hustle going so it’s there if you ever need to depend on it.

Map out a backup location – If you’re retiring in the U.S., Canada, Australia or Europe, there are plenty of places in the world that have a lower cost of living than where you live now. If your joint assets split in half wouldn’t be enough to keep you financially independent where you are now, figure out where they would be enough. And then ask yourself, honestly: Would you be happy relocating there, far from friends and family and all the things you’re used to? If yes, great. You’ve got your backup plan. If no, then reread the three options above and build at least one of them into your retirement plans.

Don’t Let Superstition Get the Best of You

If you heard me on the BiggerPockets Money podcast (#mouseonesie) a few months ago, you might have heard me talk about the superstition that lingers around divorce. Some people seem to think that acknowledging the existence of divorce or discussing it with your spouse makes it more likely to happen. I think exactly the opposite is true: talking about the possibility of divorce means that you are communicating openly and honestly as a couple, which makes you far less likely to end up divorced.

So if all of this feels icky to you or too hard to talk about with your partner, don’t let the superstition win. Send them to this post and tell them I made you bring it up if you have to! ;-) But you both owe it to yourselves to make sure you’ll be okay no matter what. And the best part of all is that it feels absolutely amazing when you know you’re set even if things don’t go to plan.

Your Turn!

For folks who are married or financially intermingled, do you and your partner talk about what would happen if you split up? Do you have a financial backup plan in the event of a split? Is there anything you’ve done personally, if not with your partner, to make sure you’ll be okay no matter what? If this isn’t something you’ve talked about or planned for with your partner, what encouragement do you need to broach the subject? What concerns do you have? This community always has great insights, so throw those comments and questions out, and let’s discuss!

New York Meetup!

Mark and I are all kinds of stoked to meet some of you guys in Manhattan at this Saturday’s meetup! Here are all the details:

• Saturday, May 5, 2018
• 2 PM – 4ish ET
• UPDATED LOCATION: Fat Cat, 75 Christopher St. in the West Village (possible $3-5 cash cover charge)

I have pink/purple hair at the moment, and Mark will be in an ONL shirt like one of the ones below, so we should be easy to spot. ;-) Drop a comment here to let us know you’re coming so we know about how big a group to expect.