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Pension-saving couples are being urged to jointly make decisions and regularly check in with each other when planning for their retirement to avoid a “nasty shock”. Research from Hargreaves Lansdown showed 45% of households where decisions are made in unison 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. Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “When it comes to retirement, two heads really are better than one, with households where decisions are made jointly doing far better than those where decisions are taken individually.”
The savings expert explained that, by working together on retirement plans, you can both aim 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.
However, taking decisions on an individual basis can leave the other partner in the dark. Ms Morrissey said: “This could mean that even though you feel you are on track with your own savings, there could be gaps growing in your partner’s pension that you aren’t aware of.”
This can become particularly apparent for those who delegate decision-making to their partner.
Ms Morrissey explained: “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 when you realise you aren’t on track for the retirement you thought, and you have very little wiggle room to do anything about it.”
In addition to this, those who rely on their partner’s pension at the expense of their own and then split up could find themselves getting close to retirement with very little of their own savings to fall back on. Ms Morrissey said: “Even if you stay together, it’s good to have your own money in retirement.”
She added: “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.”
The Pensions and Lifetime Savings Association (PLSA) regularly publishes estimations of how large a pension pot should be to achieve certain standards of living, including minimum, moderate, and comfortable. Its latest findings, released in early 2024, show that the total annual income needed for the different rankings has increased significantly in just one tax year, with those aiming for even a “moderate” retirement needing an annual stream of up to £9,000 more. Click here to find out how much you should aim to save to achieve different lifestyles.
