If you have a partner, spouse or ‘significant other,’ planning your retirement as a couple can make a lot of sense. And by this we don’t just mean what you’re going to do in retirement but also how you’re going to fund it. Using both your savings pots could lead to a higher and more comfortable retirement income in the years ahead. Plus, you may be able to make your future income more tax efficient.

A retirement built for two

You may well have joint bank accounts and a joint mortgage. But planning your retirement income together might not have occurred to you, as you’ll have separate pensions, and perhaps investments held in your own names too.

However, according to our data retired couples are more likely to enjoy a higher standard of living than single retirees. So retirement planning together can clearly bring benefits.

There’s plenty to think about

As you and your partner head towards retirement, there are some big decisions ahead. Here are just some of the things you may need to think about:

  • Have you fully considered the lifestyle you want in retirement, and how much it will cost, factoring in things like home improvements, new cars, holidays and potentially care in later life?
  • Do you have a realistic idea of how much money you could have to live on in retirement?
  • Should one partner be paying more into their pension now because they’re on a higher rate of tax, and so get more tax relief?
  • How will you take your pension savings? As a regular income? Or as lump sums, either regularly or ad hoc? Or would it make sense for one or both of you to set up an annuity to give you a guaranteed income for life?
  • Did you know you pay tax on pension income, whereas you don’t when you take money from an ISA? Could your future plans for how you take your money be more tax efficient?
  • If you’re keeping some or all of your pension savings invested, what kind of investments do you want to keep your money in over the years ahead to make sure they last as long as you need them to?
  • Have you thought about the fees and product charges on all your pensions and investments, and how these could be reduced?
  • If either of you has a final salary-type pension, when will you start to get an income from that?

How retirement advice can help

Some of the decisions you need to take when planning your retirement are irreversible and could affect your lifestyle for years to come. This is where expert retirement planning advice can really come into its own, and help take the pressure off. Getting advice could help you and your partner feel prepared and much more confident about retirement.

A financial adviser can help you understand your future income needs, plan your future spending and saving, understand the tax implications and make sure you’ll be comfortable in the years ahead. And if a planning session reveals a gap between your dream retirement and the current reality, sound advice now could help you to close that gap.

Find out how our financial planning and advice services could help you and your partner plan the retirement you want.

One real couple making real plans

One of our advisers talked to Doug and Sheila*, aged 66 and 63 respectively. Doug was just three months away from retirement and keen to set up an income from his £340,000 pension savings. Although Sheila was still a few years from retirement, we recommended a planning session together so our adviser could consider all of their pension and non-pension savings and investments, Sheila’s current income, their two state pensions and their tax allowances. We then put all of this into one cohesive plan. Our adviser’s projection gave them an income of £51,900 a year up to the age of 90, rather than the £39,700 which would have been possible on Doug’s finances alone. The advice also recommended that Doug didn’t take money from his pension savings earlier than he needed to and helped ensure he wouldn’t pay more tax than he had to. Both Doug and Sheila said they really valued the planning conversation and felt things had been explained well to them. *Clients’ names have been changed. 

The information in this article should not be regarded as financial advice. Everyone’s circumstances are unique and will need bespoke financial advice. Information is based on our understanding in September 2022. Tax rules can always change in the future. Your own circumstances and where you live in the UK could have an impact on tax treatment.