Reaching retirement as a second time around couple can present a number of tricky issues. Planning how to manage money in retirement is complicated enough for any couple, but throwing relationship property issues into the mix makes it even more so.
The key issues for retiring second timers are:
- Should finances be managed separately or jointly and what are the implications?
- How should financial inequality be dealt with – that is, where one person has significantly more assets or income than the other.
- How can the needs of children and partners be met in a fair manner, especially on the death of one partner?
The answers to these questions depend on a number of factors, including how long the couple have been together, whether both partners have children from previous relationships, whether they have children together, and the degree of trust between them. It is essential to have legal advice so that estate planning issues can be dealt with at the outset and reviewed regularly. The outcome of this process will help guide how the key issues are addressed. For example, if partners wish to pass on their individual assets to their children on death, this may lead to assets and income being kept separate through retirement, including the share of the family home. A good estate plan will have the right balance between the interests of children and the interests of a surviving, possibly very elderly, partner. Keeping finances separate when there is inequality in assets and income, can lead to feelings of resentment, restriction and inadequacy. Sharing unequal resources requires a high level of commitment to a relationship but it can smooth the path for a much more enjoyable retirement.
Finding the answers to the key issues for second times requires good communication and professional advice.