This Valentine’s Day, you may have taken the opportunity to reflect on the life you’ve built with your partner. One area you might have overlooked is your finances, specifically planning for retirement together.

Despite its advantages, research shows that discussing money isn’t a regular practice for many couples. A survey from Aqua found that only 24% of UK respondents frequently discuss their finances with their partner, while 39% rarely do.

Failing to discuss money could mean missing out on the advantages of joint retirement planning. Continue reading to discover three compelling reasons to approach retirement planning as a team.

1. Thinking about shared retirement goals can give you something to work towards

Retirement is a time to relax, explore new interests, and tick items from your bucket list. Achieving your dream lifestyle starts with defining what it looks like for both of you.

Even if you agree on major goals, subtle differences might exist. For instance, one of you might dream of travelling the world, while the other wants to spend more time with loved ones.

Not settling these differences could make it harder to plan effectively. Conversely, by having open conversations early, you can clarify shared goals, set realistic targets, and map out the steps to achieve them.

Working towards a common vision might also boost your motivation to save, making the process more rewarding for you both.

2. You could make better use of tax-efficient pension contributions

Maximising the tax efficiency of your pension contributions is another key benefit of planning for retirement together.

Pension contributions typically receive tax relief, meaning the government essentially “tops up” your savings. Indeed, basic-rate taxpayers receive 20% relief at source, while higher- and additional-rate taxpayers can claim an extra 20% or 25%, respectively, through their self-assessment tax return.

As a basic-rate taxpayer, a £100 increase in the value of your pension pot costs you just £80, with £20 coming from the government. If you’re a higher-rate taxpayer, you could claim an additional £20 through your tax return, reducing the “cost” of your contribution to £60.

As of 2024/25, the total amount you can contribute to your pension tax-efficiently in a single financial year stands at £60,000, or 100% of your earnings, whichever is lower. This is known as the “Annual Allowance” and it includes personal and employer contributions, as well as tax relief.

By planning together as a couple, you could make the most of both of your allowances.

For example, if you earn significantly more than your partner, you might find that you’re fully utilising your Annual Allowance, while your partner isn’t. By moving some contributions to your partner’s pension, you could maximise your combined tax-efficient savings.

Moreover, if your partner has reduced their working hours or taken a career break – perhaps to care for a child or loved one – they can still contribute up to £3,600 a year to their pension and still receive tax relief, even with no earnings.

In this instance, you could make contributions on their behalf to ensure they continue to bolster their retirement fund.

3. Planning your estate could help you feel prepared for the unexpected

Estate planning is essential for ensuring your wealth is passed on in a way that aligns with your wishes and recent legislation proposals have made it even more vital.

From April 2027, unused pension funds will be included in your estate for Inheritance Tax (IHT) purposes. This change could push the value of your estate closer to the IHT threshold.

As of 2024/25, you can pass on £325,000 tax-free under the nil-rate band. An additional £175,000 is available from the residence nil-rate band, provided you leave your main residence to a direct lineal descendant.

When combined, this means you could pass on up to £500,000 without incurring IHT. As a couple, you can also transfer any unused allowances to each other, effectively doubling your combined threshold to £1 million.

While you might have previously planned to use your unused pension as a way to tax-efficiently pass on wealth, this won’t be possible from 2027 onwards (if the proposed changes go ahead). We can help you make any necessary changes to your estate plan, so be sure to get in touch.

It’s worth noting that professional guidance can be incredibly helpful if you need support keeping up to date with new, and ever-changing, financial legislation.

Get in touch

Just as planning your retirement as a team is effective, partnering with a planner can be even more powerful. Be sure to contact us now to find out how our Chartered financial planners can help.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance. The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The Financial Conduct Authority does not regulate estate planning or tax planning.