Retirement planning as a couple: Balancing different goals

11th August 2020

Planning for retirement should be an exciting time in your life. You’re able to give up work and focus on the things you enjoy. But what if your aspirations and financial expectations don’t line up with your partner’s? Creating a balance can help both of you feel fulfilled in the next stage of your life.

It’s not uncommon to find that partners have conflicting views of what they want retirement to look like. While you’re both working, you may have discussed ensuring you have enough saved or even talked about some of the things you’d like to do. However, most of us don’t start considering retirement in great detail until the milestone isn’t too far off. Discussing your plans can help make sure you’re both on the same page as you move forward.

Before you start the conversation, it’s worth both of you separately thinking about the retirement lifestyle you’d like:

  • Are there any ‘big ticket’ experiences you’d like to do?
  • What would your ideal day-to-day lifestyle look like?
  • What are your priorities for retirement?

Understanding what you’d like, can help you identify shared aspirations and where you need to strike a balance between two views. Often when we first think of retirement, it’s the experiences we want in the initial years after giving up work that is the focus, such as travelling or helping to raise grandchildren, but your daily routine as you settle into retirement is just as important.

Understanding retirement finances

While couples may often discuss household expenditure, the same can’t be said for retirement finances. In fact, 24% of couples have never discussed their retirement income. It can mean you have widely different expectations for your income and approach to managing money as you enter retirement.

As with lifestyle goals, discussing what you want is important.

The first step should be to understand what income and assets you expect to have to fund retirement. This may include the State Pension, Final Salary pensions, Defined Contribution pensions, savings, investments, and property.

But understanding assets isn’t the only thing you need to do; you also need to understand how both of you approach retirement finances:

  • What assets will create your base income?
  • How would you create a financial safety net to cover the unexpected?
  • What level of income do you need for the day-to-day lifestyle you want?
  • How do you feel about investment risk as you enter retirement?
  • What kind of legacy would you like to leave behind for loved ones?

The answers to these types of questions will be linked to the lifestyle you want to achieve. However, they can highlight the differences in how you view money, even if it’s something you’ve agreed on before. In the past, you may have been happy investing in mid-risk funds to grow your wealth but in retirement prefer stability and financial security. Your partner, on the other hand, may be keen to increase investment risk as outgoings reduce and you have a base income for essentials. Looking at financial views now can help you strike a balance and understand the short and long-term impact of the options.

How financial planning can help

Financial planning can ensure your goals and finances align. But the process can also help you understand what your priorities are too.

A key part of financial planning is talking to clients to set out goals, lifestyle aspirations and more. We ask what it is you want your savings to do for you. It’s a chance to think about what is most important as you start planning for retirement. Having an outside perspective go through your retirement plan can help you see what your priorities are.

Where retirement goals don’t match up perfectly, there are often solutions that can ensure both of you are happy and confident as you give up work. Getting your finances in order can give you the freedom to do more without having to worry about the uncertainty of the long term. If you’d like to start your retirement planning with us, please get in touch.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change.