When you’re part of a couple, most big financial decisions, such as where to live, whether to extend the kitchen or book a holiday and how to split the bills, get made together.
But planning for retirement often falls through the cracks of this teamwork. Many couples manage their pensions and savings separately, each assuming the other has things broadly under control.
The trouble is, retirement works differently when you’re planning as two people rather than one. Your combined income needs, your different pension pots, State Pension entitlements and even life expectancies all interact in ways that are easy to miss if you’re not looking at the full picture together.
Many Leicester couples reach their 50s or 60s and realise, for the first time, that they’ve never actually sat down and worked out what retirement looks like for both of them.
This blog looks at how couples can plan more effectively for retirement and shares some practical tips to help you build a joint strategy for a comfortable future together.
Why joint retirement planning is essential
Planning retirement as a couple rather than as individuals brings several advantages.
For a start, you get a complete picture of your combined resources. One partner might have a generous workplace pension, while the other might have several smaller pots from different employers, or has taken time out of work to raise children. Looking at these together will help you understand what you’re working with.
Joint planning also means you can spot any gaps or shortfalls before they become problems. Perhaps one partner has been diligently saving into a pension for 20 years, while the other has barely started. On its own, that might look concerning. Viewed as part of a household plan, it might be perfectly manageable, provided you both understand the situation and plan accordingly.
If you retire at different ages, or want to retire at the same time despite having different pension positions, this needs careful planning well in advance. Couples who leave these conversations too late sometimes find one partner is ready to stop working years before their finances allow it.
Talk about your retirement vision together
Before diving into your numbers, it’s worth having an honest conversation about what retirement looks like for each of you.
Do you both want to travel extensively, or is one of you happier pottering around the garden?
Would you like to retire at the same time, or is one partner planning to work part-time for a few more years?
Are you hoping to downsize, move closer to family or stay put in your current home?
These conversations matter more than you might think. Partners often carry different, unspoken assumptions about retirement. One might picture six months a year in Spain, while the other has never considered leaving Leicester. Working through these differences early will give you time to find common ground, or at least a plan that works for both of you, rather than discovering the mismatch when it’s too late to do much about it.
Understand your combined pension position
Once you’ve discussed your vision, it’s time to get practical. Building a full picture of your household’s retirement income starts with understanding what each of you has got.
That means tracking down all your pensions, including any old workplace schemes from previous employers. Many people lose track of pensions from jobs held years ago, and these forgotten pots can add up to a significant sum once located.
It’s also worth checking your State Pension forecast individually, using the HMRC app or the Government website. Partners often have different entitlements, particularly if one has taken career breaks to raise a family or care for relatives. Any gaps can affect their National Insurance contribution records and the amount of State Pension they’ll eventually receive.
Once you know what you’ve each got, you can look at the household total. A couple with combined income needs of £40,000 a year might find that one partner’s pension alone gets them most of the way there, changing how much the other partner needs to focus on catching up.
This exercise often reveals surprises, both positive and negative, which is why it’s worth doing sooner than later.
Make the most of tax-efficient opportunities as a couple
Being part of a couple creates retirement planning opportunities that aren’t available to individuals.
If one partner isn’t working, or earns significantly less than the other, the working partner can make pension contributions on their behalf. This keeps both partners building retirement savings, even during periods when only one income is coming in.
ISA allowances work on an individual basis, too, meaning couples effectively have double the tax-free savings and investment allowance to use each year. A couple who each use their full £20,000 ISA allowance can shelter £40,000 annually from tax on investment growth, compared to £20,000 for someone planning alone.
Balancing pension contributions between higher and lower earners can also improve your overall tax efficiency. For example, if one partner is a higher-rate taxpayer and the other pays basic rate, directing more pension contributions through the higher earner, where the tax relief is worth more, while the lower earner focuses on their ISA allowance might make sense, depending on your specific circumstances.
These strategies aren’t one-size-fits-all. The right approach for you will depend on your income, savings and long-term goals. But couples who plan together are far better placed to spot and use these opportunities than those managing their finances in isolation.
Plan for different retirement ages and life expectancies
It’s easy to plan as though both partners will retire on the same day and live to the same age. In reality, this rarely happens.
Perhaps one of you is a few years older or wants to keep working part-time after the other has fully retired. This can affect your household income at different stages, so it needs factoring into your withdrawal strategy.
Life expectancy is a harder conversation, but an important one. Women, on average, live longer than men, and this can mean one partner needs their pension income to stretch considerably further than expected. Building in protection for the surviving spouse, whether through life insurance, IHT planning or careful drawdown, will help ensure the remaining partner isn’t left in a difficult financial position.
None of this is pleasant to think about, but couples who address it early tend to feel more confident about their plans than those who avoid the topic altogether.
Protect each other along the way
Planning for retirement isn’t only about pensions and savings. Protecting each other financially, should something unexpected happen before you get there, is just as important.
Life insurance can help protect your partner if you were to die before retirement, particularly if you have a mortgage or dependent children. Critical illness cover provides a financial cushion if either of you were to face a serious illness that affects your ability to work and save.
Lasting Powers of Attorney are also worth putting in place, allowing you to make decisions on each other’s behalf regarding health or finances if either of you becomes unable to do so. These documents provide real peace of mind and can help your partner and family avoid any unnecessary complications further down the line.
Review your plan together, regularly
A retirement plan isn’t something you should create once and leave alone. Your circumstances will change, so your plan needs to change with them.
A new job, a house move, the arrival of children or grandchildren, an inheritance or a change in health can all affect your retirement strategy. Making time to review your plan together, ideally once a year, will help you stay on the same page and adjust as needed.
Couples who check in regularly tend to catch problems early and adapt more smoothly than those who only revisit their plans when something forces the issue.
How can BDWM help?
Planning for retirement as a couple takes more coordination than planning alone, but the rewards are worth the effort. A joint approach can help you build a clearer picture of your combined finances, spot opportunities you might otherwise miss, and head into retirement with a shared understanding of what you’re working towards.
At BDWM, we specialise in helping couples in Leicester plan their retirement together. We’ll look at both partners’ pensions, savings and income sources as a whole, identifying tax-efficient strategies and building a coordinated plan tailored to your combined goals.
Whether you’re just starting to think about retirement or want to review your existing plan, our team can help you get the full picture and make more confident decisions. We offer a no-obligation initial consultation to discuss your circumstances and explain how we can help you and your partner plan for a more secure and comfortable retirement. Contact us today to take the first step towards planning your retirement together.