Stretching savings to fund the retirement age gap

Types of Pension Plans


You may not mind the age gap between you and your partner – but you should think about how those years impact your pension. Age is a big factor in deciding how to spend retirement savings.

But many couples approach the issue the wrong way, especially if the youngest partner is a woman. Take a couple where the man is 58 years old and the woman is 50.

That is an eight-year age gap with the man picking up his state pension at 66 years old and the woman at 67. Longevity figures suggest the man will live until 85 years old and the woman to 88 years old.

How long must savings last?

That means retirement savings must last from when he is 66 until she is 88 – a gap of 22 years. The gap could stretch even further if the woman is in good health and a few years should be added as a contingency.

Financial advice would suggest that playing safe with savings is no good in these circumstances. Retirement planning should be a little more adventurous even though this introduces more volatility. To do this, financial plans should be based on the younger life as they are more likely to run out of cash.

The temptation is for the younger partner to retire at the same time as the older, even though they must sacrifice some years of earning and saving. The better decision might be for the older partner to work a couple of years longer and for the younger to stop a year or two early to smooth the transition into retirement and giving some extra income for saving.

How long will you live?

Age is one of the keys to retirement planning – but the problem is no one knows how long they will live. Longevity figures are averages and can vary depending on health and wealth. Several online calculators will assess your longevity and give an estimate of how long you are likely to live.

Try these – but do not forget they are estimates and not guarantees and the result depends on the honesty of the information you input:

Life expectancy calculator – Aviva insurance
The Death Clock

This calculator gives an idea if you are on track with savings and how much money you might need to fund a comfortable retirement.