Most couples would ideally want to retire at the same time.
It would mean setting off on the next stage of life together and having someone to discover the joys (and the challenges) of a life of leisure with.
But what happens when a couple are of very different ages?
Simultaneous retirement may be rather harder to arrange, because of problems with pensions.
At Continuum we are looking at the special challenges facing mixed age couples when one may be due to retire – but the other is not.
Age differences and pensions
The average age gap between opposite sex couples is around two or three years, but many partners have a much larger age difference.
This of course means that they will reach state pension age at different times. In the distant past, when men received a state pension at 65 and women at 60, the tendency for husbands to be older than their wives tended to mitigate the effect of the differential.
Now that state pension age has been aligned for both men and women (and is currently 66) couples with an age gap will both reach it at the same age – but not at the same time.
So, if you are a mixed-age couple looking to retire together, there will be a discrepancy between when each of you will receive your state pension. This could complicate your retirement planning – because the state pension is a major element in most people’s retirement income.
The problem of having access to pension funds at different times also affects private pensions. The age at which you can normally access a private pension is known as ‘normal minimum pension age’, and is currently set at 55, although it may be possible to access a pension before 55 if you are in poor health and have had to stop working. But the position is set to change. The normal minimum pension age is set to increase to 57 in 2028. Some couples will have one partner able to access their pension at 55 in the next few years, while the second partner will be forced to wait an additional two years on top of their age gap before being able to access their funds.
Beware of offers – and particularly cold-callers – claiming that they can help you access your funds before 55. It maysound like an appealing offer but it is almost certainly a scam. There could be heavy tax penalties even if it was in some way legitimate.
How can mixed-age couples coordinate their retirements?
If there is an age gap, you may need to plan your retirement accordingly. If one of you is due to retire first, they could simply continue working, if they are able.
But most couples might prefer making the most of their pension savings so they could both retire earlier.
There is nothing that can be done about the state pension age, but there could be ways to boost your pension pot – and ways to make the most of the savings you already have. It might be possible to let you both retire years before the state starts to contribute to your income.
We can start looking at the possibilities with a full pension review – which will show you just what your income may be in retirement, and help you look at your pension plans again to ensure that you can look forward to the kind of retirement you want, when you want.
At Continuum we believe if you act early enough, it could be possible to enjoy the simple pleasure of retiring together.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable retirement strategy, you should seek independent financial advice before embarking on any course of action.
The value of investments can fall as well as rise and you may get back less than you invested.
A pension is a long term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Pension income could also be affected by interest rates at the time benefits are taken.
Accessing pension benefits early may impact on levels of retirement income and your entitlement to certain means tested benefits.
Accessing pension benefits is not suitable for everyone. You should seek advice to understand your options at retirement.