27th September 2016 at 10:31am
Money, it’s a subject many of us just don’t feel comfortable discussing. Couples avoid talking about it, parents rarely discuss their finances with their children, asking for a pay raise feels uncomfortable, even splitting a bill or figuring out the tip when dining out becomes an awkward moment.
But it’s such a fundamental part of each and every one of our lives, so why are we so uneasy talking about it?
The money taboo
There’s certainly an element of social conditioning; we’re led to believe it’s a vulgar subject and manners dictate we should seldom mention it. But when it comes to couples and their finances there is maybe a more deep rooted reason – ‘fear’ – we’re afraid of being judged or criticized for our spending habits so we clam up rather than discuss the subject.
Couples regularly missing out on tax relief by not looking at the bigger picture
However, it’s hugely important that we do, especially when it comes to retirement planning.
Look who’s talking
From a flat rate State Pension to new freedom rules, there is a lot to talk about when it comes to planning for retirement. Yet research by the Prudential found a fifth of couples over age 40 have never discussed their pensions.
The survey of couples aged 40-plus on their retirement aspirations, found:
- 49% have no idea about the level of retirement income they can expect when they stop working
- 27% don’t know how much money their partner has in pension savings
- 63% have never met as a couple with a financial adviser to discuss retirement planning
- 67% had not talked to their wider family about their retirement planning
These stats are disturbing as this lack of communication could impact retirement income in a number of ways. For example many couples are running the risk of leaving their partner in financial difficulties.
Only two in five (42%) have plans in place to ensure retirement income will continue if one of them dies, while a further 15% said that one partner has made a will but no further arrangements regarding a continuing income.
Joint consultation with your financial adviser could be a good idea
Also you may be missing out on valuable tax relief on pension savings by not looking at the bigger picture. And this lack of discussion could lead you to having unrealistic expectations of what their savings may be worth, putting those retirement dreams at risk.
Take the conversation further
But it’s not only worth speaking to each other, it’s also worth taking the conversation even further.
Whether just starting out with your future planning or whether you’re in the run up to retirement, a joint consultation with a financial professional can help you work out your saving and retirement income options, matching up what might suit you best from a collective perspective.
Pencil in the time
By not discussing your retirement plans you could be short changing your future together. The golden years may ultimately be the best of your marriage, if you understand each other’s future goals, needs and expectations. Discussing how much money you’ve both saved for retirement and how it can be best managed, is vitally important for colouring in that retirement picture.
It’s good to talk.
The information in this blog or any response to comments should not be regarded as financial advice. Pensions are investments and their value can go up or down and may be worth less than you paid in. Laws and tax rules may change in the future. The information here is based on our understanding in September 2016. Your personal circumstances also have an impact on tax treatment.