41% of couples have never discussed retirement income options

1st November 2013

Fewer than half (46%) of couples over the age of 40 in the UK have made arrangements to ensure that one partner will continue to receive a retirement income after the other dies, according to new research from Prudential.

Women over 40 are most at risk with one in five (21%) currently planning to depend entirely on their other half for a retirement income, compared with just five% of men over 40. Overall, in 13% of over-40s couples one partner (male or female) will be entirely reliant on the other’s pension to provide an income in retirement.

The Prudential study found that 53% of couples aged over 40 have made no arrangements to ensure that when one partner dies, their pension will continue to pay an income to the surviving partner. More than a quarter (28%) of couples have yet to discuss the impact on pension arrangements of one partner’s death, while 19% have at least made a will but no other financial plans.

The retirement risks faced by many couples are further highlighted by the fact that 41% admit they have never discussed how they will turn their pension savings into an income in retirement. A further 19% have discussed it but couldn’t agree on the best option, and less than a third (30%) of couples have reached a decision on the best retirement income option. However, only 10% plan to purchase a ‘joint life’ annuity – where a surviving spouse, partner or dependant will continue to receive an income after the annuitant dies.

There is also significant confusion among couples about the sources of their retirement income. One in seven (14%) don’t know what their main source of income will be when they stop working – however men are more certain as only nine% said “don’t know” compared with 18% of women.

Vince Smith-Hughes, retirement expert at Prudential, said:

“For couples looking to enjoy a comfortable retirement, organising and agreeing their income options should be a priority –long-term financial planning can be even more important than managing day-to-day-finances.

“Our research shows that even those couples who have discussed their retirement finances have still made decisions that could leave one of them without an income if they outlived their partner.

“Having open and frequent conversations as a couple about your retirement planning is definitely an important first step. However, making the right decisions on the best retirement income options – including what happens when one partner dies – can be daunting. That’s why seeking advice from a retirement specialist or financial adviser is just as important. There is also plenty of free information available from independent organisations such as the Money Advice Service and The Pensions Advisory Service.”

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