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What happens if you have a very different approach to money management to your partner or have very different goals? These are particularly important questions to ask when it comes to retirement planning.
It can feel like a long way away and if you are already deciding how to deal with other financial issues such as buying a house, raising children or debt repayments, it can be hard to make sure it’s a key priority for both of you.
However, working with your partner on your retirement planning really does deliver results. According to the latest data from Hargreaves Lansdown’s Savings and Resilience Barometer, when it comes retirement two heads really are better than one. The data shows that 45% of households who take decisions jointly are on track for a moderate retirement income. This compares to just 37% where decisions are taken on an individual basis and 35% where they are delegated to a partner.
Read more: How to plan for retirement and track your pension pot income
Working together on your retirement plan means you are both aiming towards the same retirement goal. Talking through what you want from this phase of life and how you can get there gives you a common aim.
Taking decisions on an individual basis means that you may be in the dark about what your partner is doing, and this could mean that even though you feel you are on track with your own saving there could be gaps growing in your partner’s pension that you aren’t aware of.
This is particularly the case if you delegate decision making to your partner. You may feel that they know more about financial issues than you but handing over all responsibility to them can prove to be a recipe for disaster. If you don’t check in with what’s really going on, you won’t know if enough is being saved or how retirement assets are performing. This could lead to a nasty shock as you get older if you realise you aren’t on track for the retirement you thought, and you have very little wiggle room to do anything about it.
Furthermore, if you rely on your partner’s pension at the expense of your own and then split up, you could find yourself getting close to retirement with very little of your own savings to fall back on.
Talking to your partner about what you both want from your retirement and revisiting these plans is all important. Building up your own pensions and checking in on their progress means you can amend goals as needed and approach retirement knowing what to expect. Even if the worst does happen and your relationship ends you will still have your own pension savings to rely on.