Experts warn that if the age gap between couples is large in their later years, it may cause financial troubles after retirement.
An age gap between partners later in life is not uncommon, but it can lead to financial hardship. Foreign media "Which?" "reported on 5 mistakes that couples with a large age gap should avoid when retiring. Experts warn that if there is a large age gap between couples in their later years, it will cause financial troubles.
According to the Office for National Statistics (ONS), around three in 10 married couples and one in three common-law partners have an age gap of five years or more. Financial services firm AJ Bell points out that problems can arise if one spouse retires first or needs unexpected care. Sarah Coles, head of personal finance at AJ Bell, said: "Age is just a number, but if there is a big age gap between couples later in life, it can cause financial trouble.
If there's a big age gap between you and your partner, here are five financial mistakes to avoid for a smooth retirement.
1. Not budgeting for your first retirement
As a couple, you should plan what your income and expenses will be when one of you retires. Couples with a large age gap may find themselves in situations where one partner is retired and the other is over fifty. You also need to plan ahead so that they can gradually reduce their hours as they approach retirement. Therefore, the younger spouse may need to bear more of the household expenses, and you may need to re-examine your current spending habits. Budgeting apps can help you plan.
2. Failure to take the cost of care into consideration
One member of a couple may need care in retirement, which can be very expensive and may take time away from the younger spouse's work. The cost of receiving care at home depends on the level of care required and the care provider chosen, with a minimum fee of £34 per hour in the UK as an example. If they need to move into a nursing home, the cost will be even higher.
3. Not prepared for death
Planning should be done in advance in case the worst-case scenario occurs, such as the unexpected death of one of the parties. First, make sure you have a will in place.
If the older spouse of a couple has a defined benefit pension, there is usually a spousal benefit, which generally pays half of the pension to the surviving spouse. Note that some laws state that you will lose benefits if you remarry after your partner dies.
4. If you want to retire together but haven’t budgeted for early retirement.
If you plan to retire together, despite a large age gap, it could mean one of you works longer than originally planned, or it could mean the other retires early. In either case, you'll need to plan thoroughly to make sure all of your budget is in order.
For emergencies, be sure to keep an emergency fund in a savings account. Generally speaking, you should have at least three to six months of expenses saved. If one of you decides to retire early, you'll need to calculate how long you have to live to collect your pension before the state pension kicks in.
Keep in mind that if you retire early, you may run the risk of being short of funds in retirement and be severely limited in the amount you can contribute to your superannuation in the future due to early access to your savings.
5. Failure to consider the cost of raising children after retirement
The age at which couples have children continues to increase; according to the Office for National Statistics, 1,126 babies will be born to a father over 60 in 2025, an increase of a fifth from 2023.
Retiring while your children are in school age means you can devote more time to them, but it also comes with a financial burden. You need to plan carefully how you will support your children on your pension income.
You may also want to consider life insurance, not just for the older spouse, but also for the younger spouse. If a parent dies while the child still needs support, the elder must rely on a pension to support the child. If you suddenly become a single parent in your 70s, you may also need financial support, and this support often costs a lot of money.
