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Couples who plan retirement together save bigger pension pots
Almost half of couples who plan their retirement together end up with better pension pots, research from an investment service finds.
Nearly half of households where partners made decisions as a pair were more likely to save a ‘moderate retirement income’ than those who plan seperately, according to data from Hargreaves Lansdown. This compares to just 40% of pension planners who made choices alone and 41% of households who left the decisions to be made by one partner.
‘Two heads really are better than one’
A ‘moderate retirement income’ is defined by the Pension and Lifetime Savings Association as £23,300 per year for a single person and £34,000 for a couple.
Commenting on the research, Helen Morrissey, head of retirement analysis at Hargreaves Lansdown said: “Two heads really are better than one when it comes to retirement planning. Putting a plan in place that works for you both ensures both parties know what their financial goals are and can work together to achieve them.”
Leaving partner in the dark may lead to less savings
She continued: “Added to this, the financial burden of planning as a couple is not as onerous as it is if you are single as you will be sharing big costs such as energy, food and housing.
“Leaving decisions to one partner leaves the other in the dark and you may not realise if you or your partner is under saving. Similarly, you could miss key opportunities to boost contributions that could make a real difference to how much you end up with in retirement.”
Tips for pension planning
Here’s some tips from Hargreaves Lansdown on how to boost your pension pot.
- Don’t rely on one partner’s savings.
Even if your partner has a great pension, do all you can to build up your own pension and boost your financial freedom.
- It’s not just about pensions.
Pensions are an incredibly tax efficient way to build retirement savings, but you can also incorporate products like Lifetime ISAs into your retirement planning.
- Make the most of both of your tax allowances.
You can contribute up to £2,880 to a non-working partner’s pension and receive tax relief.
- What happens if you split?
If you’ve relied on your partner’s pension at the expense of your own, you may find yourself approaching retirement with little, if any, provision. It demonstrates the importance of building wealth in your own name, so you have options. Pension provision should always form a part of any financial discussions around divorce.
