Just 32% of people over the age of 40 who live with their spouse or partner have made arrangements to ensure that if they die their other half will continue to receive an income from their pension.
This is one of the findings of Prudential’s latest annual research into the retirement aspirations and financial planning of UK couples aged 40 and over.
This year’s results found couples risking their retirement plans by failing to talk to each other about their finances. 22% of couples have never discussed their financial plans for retirement and 10% last talked about their retirement finances more than six years ago.
Prudential has conducted its couples retirement research every year since 2010 and the results have consistently found that women’s retirements are most at risk from couples’ lack of financial planning conversations. This year’s figures show that one in 10 women will be completely reliant on their partner’s income in retirement while a further 13% expect their income to come entirely from the State Pension.
Those couples who have discussed their retirement finances estimate that they will live on a joint retirement income averaging nearly £28,500. However, this figure is at risk of reducing dramatically if the worst were to happen to one of the partners – nearly three in 10 people (29%) have pension savings that will provide an income only to them as an individual.
62% of couples have no idea how much annual income they expect to receive as a couple when they are both retired. Meanwhile 18% of people say they do not know how much money their partner has in pension savings.
Kirsty Anderson, a retirement income spokesperson at Prudential, said: “Life is busy for everyone and it is tempting to avoid difficult conversations, but couples really do need to talk about their finances and retirement planning in particular. A conversation about what might happen to a couple’s finances if the worst should happen to one partner can be particularly difficult but it could make the difference between the survivor being left with nothing or having a comfortable retirement.
“Couples who don’t talk about their retirement finances may end up making plans separately and missing out on making the most of the pension saving tax relief available between them. They may also have unrealistic expectations of what their combined retirement savings are worth.
“For many couples, the first step to agreeing regular pension contributions and eventually securing as comfortable a retirement as possible should be to take professional financial advice together.”
Only 13% of couples aged 55 and over have altered their retirement income plans since the new rules came into effect in April 2015. 8% said that they didn’t even know there were new pension rules.
The pension freedoms have also brought about some new concerns for couples – the most common being making decisions that will lead to them running out of money in retirement (38%). Other worries include making mistakes in retirement planning (20%), facing unnecessary tax bills (16%) and falling victim to fraudsters (11%). Meanwhile, 11% of couples actually believe that there are now too many retirement income choices.
