A third of couples over the age of 40 know nothing of their partner’s retirement pension plan and general finances.
As a result, there is no coherent financial planning in place, based on the full picture of a household’s finances, according to Prudential.
This lack of communication between partners is a barrier to sensible financial planning, and is particularly detrimental to retirement planning, as they have no idea of their probable combined income in retirement.
The Prudential research showed that nearly a third (32%) of couples over 40 but not yet retired ‘don’t know or understand’ the details of their partner’s retirement savings, and that 22% have never talked to their partner about financial planning for retirement.
Women are particularly prone to reticence, with a quarter having failed to discuss their finances, compared to a fifth of men.
Lower earners with household income of £20,000 or less also seem less likely to share their financial planning, while 3 quarters of those households earning over £70,000 do have discussions on their financial future.
The research highlights the urgent need for structured retirement pension planning and financial advice, and general financial planning for couples to ensure that they are not simply ‘banking on hope’ by assuming that their household’s retirement pension plan will meet their future needs.
Prudential suggests that topics to be included in a rounded family financial plan should include making a will, discussing pensions and how much to save, talking about when to retire, working out retirement income, reviewing total savings, researching annuity options, leaving an inheritance, and financing long term care.
The main calculations required as the basis for the above family financial plan can easily be done online with the Principle First suite of financial planning tools. This information can form the basis of an informed discussion with a financial adviser as a concrete strategy for moving forward.
With the Principle First Pension Planner tool you can enter a target level of ‘buying power’ on retirement, by nominating a salary in today’s terms. The pension planner will then calculate how large a pension pot will be needed, to achieve that buying power, and how much must be saved monthly, as of today, to achieve it.
With the Principle First Inheritance Tax Planner it is possible to calculate the value of your estate, based on the value of your assets less the value of your debts and liabilities. On that basis, and taking into account the current individual IHT allowance of £325,000 per person, it is possible to see how much of the wealth you wish to pass to your children could be subject to Inheritance Tax at 40%.
