Retirement planning is complicated enough for any couple, but when there is a second time relationship involved, there are even more issues to consider. In many cases, for couples coming together later in life after a previous relationship there is disparity of both assets and income. The consequences of the Property (Relationships) Act mean that such couples often start their relationship cautiously when it comes to managing finances, with a clear separation of assets and income. A ‘contracting out’ agreement is frequently the basis for protecting individual assets in the relationship. Bank accounts are either kept separate, with bills split at the time of payment, or alternatively there is a joint account for bill payment into which each partner pays a set amount each payday. Either of these methods works well when both partners are working. Retirement of one or both partners raises the issue of whether assets and income should be combined either in full or in part, particular when there is significant disparity.
To what extent should a working partner support a retired partner? If there is a significant difference in age, should the younger partner retire early and if so, should the older partner provide financial support in order to help make this possible? What happens if one partner can afford to travel and the other can’t? Should investment accounts continue to be managed separately? What rights does the surviving partner have to stay in the family home on the death of the other partner? These are all difficult questions which must be confronted at retirement as they will have a significant income on how assets and income will be managed as part of a retirement plan. The outcome of these discussions may necessitate changes to the ‘contracting out’ agreement, which should be regularly reviewed throughout retirement.