Dean Butler, Managing Director for Retail Direct at Standard Life, part of Phoenix Group said: “With Taylor Swift and Travis Kelce announcing their engagement this week, fans are celebrating the fairytale moment in their own way – from admiring the ring to predicting the wedding dress. But while planning a wedding is an exciting time for all couples, it’s important not to forget about planning your long-term financial future, including your pension.
“For couples starting married life, now is the perfect time to discuss your long-term financial goals. With Pension UK’s latest Retirement Living Standards revealing that couples currently need a joint annual income of £60,600 to achieve a comfortable standard of living in retirement, and £43,900 per year for a moderate lifestyle, it’s worth having the conversation now to ensure you’re both on the same page. You can then familiarise yourselves with each other’s pension pots and regular contributions and assess where you currently stand towards your joint retirement goals. While marriage brings many benefits, and love is of course the most important, it’s also worth thinking about the various ways in which you can boost your joint retirement pot by making use of tax allowances.
“And yes, while no one likes to talk about divorce during wedding planning, its important – especially if you have substantially different net worths like Taylor and Travis. Having honest conversations now can give piece of mind and protect both partners, just in case you’re never (ever ever) getting back together.”
Dean Butler at Standard Life shares key pension tips for couples getting married or who have recently married:
Make sure you talk about your pension and your long-term retirement goals: “Planning for retirement as a couple can be quite different to planning as an individual and it’s important to look at both of your finances as a whole – including your current pension pot, your salary, and any other potential savings that you might be able to draw upon. It’s also worth discussing early on what type of lifestyle you would both like in retirement. The Retirement Living Standards can be used as a useful guideline for this. They give you an estimate of how much you’d need in retirement to pay for three different lifestyles: comfortable, moderate and minimum.
A ‘minimum’ lifestyle in retirement would cover all your basic needs with a little left over for fun. You wouldn’t have a car or be going on holidays outside of the UK, but you’d have enough to cover a basic food and eating-out budget, some home maintenance, and the odd update to your wardrobe.
A ‘moderate’ lifestyle would allow for a bit more flexibility and comfort. You’d be able to run a car, enjoy a three-star holiday in Europe each year, and have a little more to spend on things like eating out, hobbies, and home improvements. It’s a lifestyle that covers essentials with some room for enjoyment and occasional treats.
If you aimed for a ‘comfortable’ lifestyle, you’d be able to afford a more luxurious holiday in Europe every year, replace your car more often and enjoy a more generous budgets for birthdays, food and clothing.
“Ultimately, the lifestyle you aim for is up to you and your partner and your individual circumstances but it’s worth getting on the same page now, establishing a shared aim and getting a plan in place to reach it.”
Consider paying into each other’s pension: “Not many people are aware, but it is also possible to boost your spouse’s pension. If they don’t earn, you can contribute £2,880 a year to their pension (topped up to £3,600 with tax relief). If you both earn, you can contribute up to £60,000 or their total earnings, whichever is lower, for the 2025/26 tax year - so it’s a good way to further boost your joint pot if you have any spare funds lying around.”
Update your pension beneficiaries: “Naming someone in your will doesn’t automatically entitle them to your pension savings when you die, so you may want to name your new spouse a ‘beneficiary’ on your pension plan (beneficiaries are the people or charities you want your pension savings to go to when you die). You can usually name beneficiaries online or via your provider’s app, or you may need to fill out a beneficiary nomination form. Providers will take your wishes into account when deciding who receives your pension savings.”
Make use of inheritance tax exemptions: “From 2027, unspent pension pots will begin to fall within the scope of inheritance tax. One benefit of marriage is the spousal exemption – meaning you can leave your entire estate to your spouse free of inheritance tax. Naming your spouse as a pension beneficiary could help ensure your savings are passed on efficiently and with minimal tax implications.”
Don’t completely ignore the chance of divorce: “It’s not romantic, but it could be smart. Discuss how pensions and assets would be treated if you split. Prenuptial agreements are a good way to protect your own assets and pension savings, especially if your net wealth is very different to your partner’s. While it may be an uncomfortable conversation, the earlier you have it, the better. Having these discussions doesn’t mean you expect a breakup, but they help provide clarity, reduce potential conflict, and ensures both partners are financially protected.”
|
