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Why couples should discuss their retirement plans

By April 30, 2024No Comments

Why couples should discuss their retirement plans

Marriage is a lifelong commitment, where both of you must have compatible goals and expectations for the future.

That includes later life, so it’s really important to be open and honest with each other about what you want from retirement.

By starting this discussion straight away, you can then work together to create a retirement plan that suits you both.

So what do you need to think about when you’re looking ahead?

1

Get a clear picture of your combined retirement income

Take a look at your overall finances and see where you’re both starting from. You can then take steps to maximise your combined retirement income and develop an investment strategy that reflects your risk tolerance.
2

Make sure your goals are aligned

It’s vital that you both understand what you want and expect from retirement, both financially and in terms of the kind of lifestyle you’d like to have.

So ask each other important questions such as:

  • When do you want to retire? 
  • Where do you want to live after you stop working?
  • How do you see yourself spending your time in retirement?

By having this conversation, you can then make sure you’re both on the same page and have similar expectations.

3

Identify gaps in your retirement plans

By looking at the big picture, you’ll be able to see if you’re missing opportunities to increase your joint income in retirement.

For example, one of you may have gaps in your National Insurance record that could affect your eligibility for a state pension.

If you start this process as soon as possible, you’ll then have longer to address any issues and work towards your retirement goals.

4

Full transparency

It’s only right that you’re both fully aware about what decisions have been taken that affect the two of you. 

Not only does that lead to better financial outcomes, it can help reduce conflict and disagreement over how to manage your personal finances.

5

Prepare for difficult times

You can face countless problems in life that you won’t have anticipated, such as disability, long-term sickness, separation and death. 

Working together means you can make sure your financial plan includes safety nets in case unexpected difficulties arise.

6

Addressing the gender pension gap

Women often find themselves with a smaller pension pot than men, partly because of gender pay disparities and also because they’re more likely to have taken career breaks to raise children. 

Creating a retirement plan in partnership therefore means women will face less of a financial disadvantage when preparing for the future.

7

Reduce your tax liability

Couples can take advantage of different ways to reduce their tax bill and maximise their retirement savings. For example:

  • One partner could contribute more to a pension plan if they are in a higher tax bracket and take advantage of tax relief at a higher rate.
  • Each partner can pick an ISA that suits them and ensure they understand their contribution limits.
  • Some pension plans allow contributions for a non-working spouse, so you’re both able to build up a healthy retirement pot and utilise unused allowances.

You want to thrive in later life, not just make ends meet, and ensure you can both enjoy a happy, fulfilling retirement.

So even if it seems a long way off right now, don’t delay talking about your hopes and plans for the future, and taking the right steps to make these a reality.

Take charge of your retirement planning with the Creative Pension Trust Member Portal.

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