Let's discuss the hurdles couples encounter when aligning retirement options and how to overcome them. This story offers practical insights and strategies to help couples align their goals and build a retirement plan that reflects their shared vision for the future.
When you meet the love of your life, it’s natural to imagine growing old together. But what many couples don’t consider are the practicalities of how that journey will unfold. For couples with a significant age gap, retirement planning can bring unique challenges, requiring extra care to align differing goals, timelines, and priorities.
Take Sarah (55) and John (68), for example. John was ready to retire and explore the world, while Sarah still felt invested in her career. They had differing timelines, energy levels, and concerns about long-term financial security. Instead of avoiding tough conversations, they leaned into them, and together they:
Talked openly about their visions for retirement and found ways to compromise.
Decided to prioritise travel early in their retirement while John was still mobile.
Discussed their fears, which led to better planning for health and longevity risks.
Through these conversations, Sarah and John gained clarity and direction, allowing them to create a tailored retirement plan that worked for both of their unique needs.
How They Designed a Plan That Met Their Needs
After their conversations, Sarah and John consulted a financial adviser to build a comprehensive plan that aligned with their goals and addressed their age-gap challenges:
They prioritised early travel with creative working arrangements
Sarah and John prioritised early travel while balancing Sarah’s career. They planned a year-long trip, with Sarah using six months of long service leave and negotiating remote work at 30 hours per week for the remaining six months.In the following years, Sarah transitioned to contract-based work, taking 3- to 6-month projects that allowed for travel between contracts. John also picked up occasional work to stay engaged.By the time Sarah reached age 60, they scaled back their travel, and she returned to a four-day workweek, blending flexibility with financial stability.
They took advantage of the tax-free pension environment.
John leveraged the tax-free pension environment by commencing an account-based pension with his superannuation upon retirement. This allowed him to draw a regular, tax-free income to support their living expenses and travel plans.Sarah and John structured their finances carefully to meet their immediate needs while securing long-term benefits. John’s pension payments, combined with Sarah’s employment income, covered their expenses and left room for Sarah to maximise her concessional contributions to superannuation. This strategy not only enhanced their current lifestyle but also strengthened Sarah’s retirement savings for the future.
They structured their assets to optimise Centrelink benefits.
Sarah and John strategically adjusted their assets to qualify for Centrelink benefits. With $400,000 in personal cash and investments, they made a $360,000 non-concessional contribution to Sarah’s superannuation, which was exempt from the assets test while she remained under Age Pension age.They used $30,000 from their savings to purchase flights and accommodation for their year-long travel plans. These changes reduced their assessable assets below the Centrelink cut-off threshold, enabling John to receive a partial Age Pension. This additional income supplemented their retirement funds, providing greater financial flexibility and security.
They ensured long-term financial security for Sarah.
To safeguard Sarah’s financial future, they incorporated strategies that provided stability and protection. They purchased a Lifetime Annuity, ensuring a guaranteed income stream for Sarah in the event of John’s passing.This approach gave Sarah and John the confidence to embrace retirement on their own terms, proving that age-gap relationships can thrive with the right balance of communication and planning.
Strategies to Align Goals
Successfully navigating retirement as a couple with an age gap involves focusing on three key areas: lifestyle planning, financial planning, and estate planning.
Lifestyle Planning
A significant age gap often means partners will experience different stages of health, energy, and mobility at different times. This can impact decisions about travel, housing, and leisure activities.
Financial Planning
Financial strategies must account for the younger partner’s longer retirement horizon and the older partner’s immediate needs. Key considerations include:• Superannuation and Income Streams: Ensure both partners have sufficient superannuation.
• Centrelink Benefits: Couples with an age gap may be able to optimise Age Pension eligibility.
• Longevity Risk: Structure investments to ensure income lasts throughout both partners’ lifetimes. This might include diversifying assets or using annuities to provide a guaranteed income stream.
Estate Planning
Protecting the financial well-being of the younger partner is critical. Estate planning ensures assets are distributed fairly and legally.• Wills and Beneficiary Nominations: Keep these up to date, especially for superannuation and life insurance policies.
• Powers of Attorney: Establish who will manage financial and medical decisions if one partner becomes unable to do so.
• Trusts or Testamentary Arrangements: These can provide for the younger partner’s future while respecting obligations to other family members.
Retirement planning is rarely straightforward, and for couples with an age gap, it’s even more nuanced. However, Sarah and John’s story demonstrates that retirement planning for couples with an age gap doesn’t have to be overwhelming. By leaning into honest conversations and working with a financial adviser, they were able to design a plan that balanced their differing timelines, financial needs, and lifestyle goals.
For couples in a similar situation, their approach serves as a roadmap: start with meaningful discussions about what matters most, and then develop a strategy that aligns with your unique circumstances.
With the right planning, you can overcome challenges, optimise your resources, and create a fulfilling retirement that works for both partners—today and in the years to come.
I hope you found this article beneficial. I’m Mo Shouman, a financial adviser with 20 years of experience helping professionals save on tax and grow their wealth. Book your financial clarity meeting below and discover how you can take your finances to the next level. I’m proud to be the only adviser who provides a detailed assessment of your financial position—whether you decide to work with me or not!