Retirement planning is no simple task, even if your circumstances are uncomplicated. And let’s face it, uncomplicated circumstances are the exception rather than the rule. Even having a long-term partner adds a layer of complexity. For those who have separated and repartnered a further layer. New couples with kids involved? Add another layer or two!
Those scenarios are complicated but relatively common. But what about situations combining some or all of the above elements where there’s a significant age gap between partners? That’s somewhat rarer, and therefore can be easily overlooked in the retirement planning world.
One person who has not overlooked it is former financial adviser and now podcaster and author, Glen James. Mr James said he has seen a number of differently aged couples who have found themselves at odds. And the reason they struggled? In most cases it was because they hadn’t articulated their wants and needs in the early stages of their relationship.
This extended beyond the financial aspects of their futures. It’s important to compare aims and wishes that encompass both partners’ entire lifestyles.
Three important retirement planning points for differently aged couples
For those of different ages in the early stage of a relationship they would like to succeed in the long term, there are three things to consider, said Mr James.
“The first of those is lifestyle. The second is the money discussion, incorporating building wealth and the strategies involved, and the third is the retirement itself.”
Breaking those down three points down, Mr James suggested the following as good starting points for each.
Lifestyle
When couples of different ages get together, there will obviously be common interests that have united them. But are those alone enough to sustain a relationship in the longer term? Will their different life stages create a conflict of aims down the track? These are good questions for couples to ask themselves early, said Mr James.
“With different ages and sometimes even different generations, we need to make sure that even if we’re not necessarily on the same page as each other, we know what page the other partner is on.
“If you know what page your partner is on, that solves a heap of problems because we’ve removed any unrealistic expectations.”
A 60-year old man, for example, might be looking forward to doing the three-month caravan trip around Australia. “Meanwhile, the 45-year-old partner is getting through peak career, out there making money,” said Mr James. “They might not have the inclination to want to do that.”
While technically not money issues but relationship issues, these components are a vital part of the equation, Mr James said. “Basically these are communication issues resulting in a misalignment of expectations.”
Resolving such potential issues (or recognising they are unresolvable) can be done before even discussing money, Mr James said.
Finance for differently aged couples
When it comes to the financial aspect, Mr James said his advice applies regardless of any age difference. “It’s about how you both view money. What’s your opinion of money? Is it evil or good? Should money be nothing more than a tool? Is one partner a spender and the other a saver? Are we joining our money or keeping it separate?”
There are no right or wrong answers to these questions, said Mr James, “but it needs to be verbalised”.
Once those questions are answered, couples can set about creating financial strategies. These can become important for the latter stages of a relationship. “For example, if someone is age 67 and applies for the Age Pension, the combined assets and income will be assessed. But if the partner is under 67 any money in superannuation isn’t assessed by Centrelink.”
That’s just one of many aspects that need to be considered. Getting advice from a registered financial adviser at an early stage of a relationship could help with all potential scenarios.
Retirement
Thinking ahead to what retirement will look like is also important, said Mr James. For couples of different ages this can come with an added layer of complexity, he said.
“If the older person in the relationship wants to stop working, you really need to make sure resentment doesn’t creep in because the other spouse is going to work each day.” Such resentment can also flow in the opposite direction.
“These are the practicalities of life,” Mr James said. “We’re all humans and we all have things bubbling away if they haven’t actually been discussed.”
Other aspects of retirement best considered early are things such as will preparation and deciding how property will be managed. This is particularly important when children from the other partner are involved. Estate planning therefore becomes an important part of the process.
In summary
When considering all three of the points above, it’s important to remember that both partners are “well-established adults”, said Mr James. “Neither has a blank slate. Early discussions to identify an impasse or showstopper can be hugely beneficial.”
That’s sound advice for all couples, age difference or not.
Glen James is the host of the money money money & Retire Right podcasts and author of The Quick-Start Guide to Investing. Link: https://www.moneypodcast.com.au/
Are you in a relationship with someone of a significantly different age? What hurdles have you encountered? Let us know via the comments section below.
Also read: ‘Rethink Retirement’ report exposes Aussies
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My late husband was made redundant at age 56 (I was only 3 years younger). He expected me to join him in retirement despite the fact that we would have no income until he qualified for his superannuation. I really loved my job and couldn’t imagine staying at home and doing virtually nothing whilst our financial savings were eaten away. It would have been disaster for our finances as well as our relationship which was pretty rocky anyway.