A Partner Is Not a Retirement Plan

By Katrina Pulbrook, Executive Planner, RJS Wealth Management

A supportive relationship can strengthen your financial position.

You can share expenses, work towards common goals and make decisions as a household.

But a partner should not be your retirement plan.

That statement is not about distrusting the person you share your life with. It is about understanding that each person needs financial knowledge, involvement and a plan that recognises their own circumstances.

Relationships change. Careers change. Health changes. People live longer than expected, retire at different times and sometimes spend part of retirement alone.

A sound retirement plan should account for those possibilities before they become urgent.

A partner can be part of your retirement plan. They should not be the plan itself.

Why women can reach retirement with less

Many women spend periods of their working lives earning less or working fewer hours.

This may happen because of:

• parental leave
• part-time employment
• caring for children
• supporting ageing parents
• managing household responsibilities
• changing careers
• taking time away from paid work
• accepting more flexible but lower-paid roles

Each decision may make sense for the family at the time.

The financial effect can accumulate over many years.

Lower earnings generally mean lower compulsory superannuation contributions. Time away from work can also reduce opportunities for salary growth, additional contributions and investment returns.

The issue is not that women have made poor choices.

The issue is that decisions made for the benefit of a household can create an uneven long-term financial outcome between partners.

That outcome needs to be recognised and planned for.

Shared finances should still involve two informed people

In many couples, one person naturally takes responsibility for managing the household finances.

They may pay the bills, speak with the accountant, review the mortgage and communicate with the financial adviser.

That arrangement can be efficient.

The problem arises when the other person becomes disconnected from the decisions being made.

They may not know:

• where the household accounts are held
• how much debt remains
• what investments the family owns
• how their superannuation is invested
• what insurance cover is in place
• how much retirement is expected to cost
• who receives the superannuation or estate assets
• how to access important documents
• what would happen if their partner could no longer manage the finances

Trust and participation are not opposites.

You can trust your partner and still understand your own financial position.

Both people should be able to attend advice meetings, ask questions and make decisions with confidence.

✓ Use the Money Confidence Checklist Review cash flow, superannuation, protection, family arrangements and major life changes.

Retirement planning is about more than a combined balance

Couples often look at their assets as one household amount.

That is useful, but it does not answer every question.

A retirement plan should also consider:

• the age each person expects to stop or reduce work
• whether one partner is likely to retire earlier
• each person’s superannuation balance
• the ownership of investments and other assets
• expected retirement income
• differences in health and life expectancy
• individual spending needs
• access to money if one person dies
• how the surviving partner would manage
• estate planning and beneficiary arrangements

Retirement may last decades.

During that time, a couple’s financial needs will not always remain the same.

One person may require care. One may continue working. One may want to support children or grandchildren. One may live considerably longer than the other.

Planning as a couple should strengthen each person’s security rather than leave one person dependent on the other’s income or knowledge.

Know your own superannuation position

Superannuation is often one of the largest assets a person holds outside the family home.

Yet many people cannot confidently answer basic questions about it.

You should know:

• which superannuation fund or funds you hold
• your approximate balance
• how your money is invested
• what fees you are paying
• whether insurance is held through the fund
• who has been nominated as a beneficiary
• when the account was last reviewed
• whether your current contributions support your retirement goal

You do not need to check your balance every week.

You do need enough awareness to recognise whether your superannuation is progressing and whether your arrangements still reflect your life.

This becomes particularly important after a career break, a change in working hours, separation or a long period of part-time work.

Career breaks need a financial plan too

A career break affects more than the salary received during that period.

It can also affect:

• superannuation contributions
• future salary progression
• personal savings
• borrowing capacity
• insurance arrangements
• retirement timing
• the division of household assets

Before taking extended leave or reducing work, couples can discuss how the long-term financial effect will be managed.

The aim is not to place a price on caring responsibilities.

It is to ensure that one person does not carry the long-term financial cost of a decision that supports the whole family.

Contribution rules, eligibility requirements and tax outcomes can change. Professional advice may be needed before acting on any superannuation strategy.

What happens when circumstances change?

Retirement planning often assumes that the current relationship and household structure will continue indefinitely.

Many do.

Some do not.

Separation, divorce, widowhood and re-partnering can substantially alter a person’s financial position.

After a relationship change, people may need to reconsider:

• property ownership
• debt responsibilities
• cash flow
• superannuation
• insurance
• wills
• powers of attorney
• beneficiary nominations
• retirement timing
• support for children
• future housing needs

These decisions are often made during an emotional period.

Having your own understanding of the household finances can reduce uncertainty and help you participate more confidently in professional discussions.

The same principle applies when entering a new relationship.

Re-partnering may introduce different income levels, separate assets, previous financial commitments, children from earlier relationships, jointly owned property and competing estate planning intentions.

These matters should be discussed early and respectfully.

Avoiding the conversation does not remove the financial questions. It simply leaves them unanswered.

A partner’s superannuation is not automatically your superannuation

Couples may talk about their combined retirement assets as though all money will always be equally available.

The practical outcome may be more complicated.

Superannuation, investment and estate arrangements are affected by ownership, account structures, beneficiary nominations and applicable laws.

You should not assume that money will automatically pass or be accessed in the way you expect.

This is particularly relevant for:

• blended families
• de facto relationships
• second marriages
• financially dependent adult children
• business owners
• people with outdated wills
• people whose beneficiary nominations have expired
• couples with assets held in different structures

Estate planning and retirement planning should be considered together.

A plan for building wealth is incomplete if it does not also consider how assets will be managed and transferred when circumstances change.

Financial independence does not mean financial separation

Financial independence within a relationship does not require separate lives or separate goals.

It means being able to understand your position and participate in decisions.

It may also include maintaining some money in your own name, knowing where documents are stored and being able to manage the finances during an emergency.

A strong partnership allows both people to be informed.

It should not depend on one person remembering every password, holding every conversation and making every financial decision.

Five conversations couples should have before retirement

Signs your retirement plan may rely too heavily on your partner

A review may be worth considering when:

• you do not know your superannuation balance
• your partner attends every financial meeting without you
• you cannot access the household financial accounts
• you are unsure what assets or debts the household holds
• you expect your partner’s superannuation to fund your retirement but have not tested the numbers
• you have taken substantial time away from paid work
• you are approaching retirement with very different superannuation balances
• you have not reviewed your will or beneficiary nominations
• your family includes children from a previous relationship
• you would not know what to do if your partner became ill or died

These are not signs that your relationship is failing.

They are signs that the financial knowledge and responsibility within the relationship may need to be shared more evenly.

Retirement confidence starts with involvement

You do not need to become a financial specialist.

You do not need to manage every account or lead every discussion.

You need to understand enough to make decisions about your own future.

That begins with knowing what you own, what you owe, what you are building and how the household plan affects you personally.

A partner can be an important part of your retirement.

They should not be the plan itself.

The stronger approach is to build a shared strategy in which both people understand their position, contribute to the decisions and have financial security in their own right.