Even small age gaps wreak havoc on finances… here’s how to avoid losing HALF your pension pot

They say age ain’t nothing but a number, but when it comes to later-life financial planning it can be a bit of a headache – especially if you reach retirement at a different time to your partner.

According to Census figures from the Office for National Statistics, nearly a third of married opposite-sex couples have an age gap of five years or more with the equivalent figure for those cohabiting being just short of 34 per cent. In 68 per cent of married couples, the man is the older partner.

While the average age difference between men and women getting married in the UK is only two years, wider gaps of 10 or 20 years are not uncommon. 

That’s easy enough to see in the celebrity world: consider the 25-year age gap between Michael Douglas, 81, and Catherine Zeta-Jones, 56, or the 17 years between George and Amal Clooney, aged 65 and 48.

‘If there’s an age gap in your relationship, it might not be something you think about very often, aside from those odd moments when you realise one of you has never heard of Valerie Singleton or Reginald Bosanquet,’ says Sarah Coles, head of personal finance at investing platform AJ Bell. 

‘But when it comes to planning your retirement, it can throw up some thorny problems.’ 

So how do you plan for it financially and avoid the pitfalls?

Talk about it from the start

Alex Delaney and her husband have been together for seven years. At 42, she is looking forward to getting back to work after taking five years out to raise their two children, aged four and one. But her partner is 50 and already thinking about winding down.

The couple, who met through a dating app, spoke early on in their relationship about their finances and aspirations for life. Alex liked that he was organised about his finances and clear about his goals.

‘I was widowed at 34 and knew I wanted a family, so I had quite upfront conversations about life and money when dating,’ says Alex.

‘We were very honest from the beginning and did a lot of planning together. He was always clear that he wanted the choice to step back from work and do more travelling; to take it a bit easier at some point.’

The couple have been diligent about saving, maxing out tax-friendly Isas for themselves and Junior Isas for their children, and saving hard into their pensions.

But what they hadn’t considered was how having children could impact their future plans.

‘Once we had our second child, some of those conversations changed because really we’re at least 18 years from full freedom,’ says Alex. ‘By freedom, it’s not just about retirement, but your responsibilities.’

After years out of the workplace, Alex is excited to have launched her own business Lemons.Life, which aims to help women with financial planning and difficult life administrative issues such as writing a will.

She says: ‘I feel very mid-career whereas my husband feels towards the end of his,’ she says. ‘I won’t get my state pension until I’m at least 67, so if I can retire at 65, I’d see that as a win.’

Mind the retirement gap

If the state pension will form a major part of your retirement income, then there may be no choice but to wait until it kicks in before you stop working. That could mean the older partner is left twiddling their thumbs for several years.

Coles says: ‘With a significant age gap, one person could reach state pension age while the other is in their 50s. They might even start to scale back at work while their partner is in their 40s and at their peak earning potential.’

Consider how you will divvy up your living costs when your incomes are so different. This is particularly important if your retirement income will be significantly less than your previous salary.

It might be that the older partner paid for more in the past when they were earning more, and the younger partner now picks up the slack. Have the conversation early or the adjustment could come as a shock – and maybe fuel resentments.

It’s not just money to consider, but time. What will the retired spouse do while their partner is working? Are they happy to wait until their spouse retires before they tackle their bucket list, or will they get started solo?

Talk about your plans. Many new retirees find the transition difficult, so make sure to have hobbies and a social network in place.

Some couples will decide to retire together. For the younger spouse this will mean having enough saved to bridge the income gap until they can claim their state pension, currently at 67.

Tom Kimche, head of advice at wealth manager Netwealth, says: ‘The decision may also depend on how lucrative and engaging the younger person’s career is. If they are earning well, still progressing and enjoy what they do, stopping work simply to retire alongside an older partner may involve a significant financial and personal sacrifice.’

Consider also how stopping work early could impact your private pension savings. Someone who put £200 a month into a pension pot from age 25 to 55 (the earliest age you can currently access your pension savings) could have amassed a fund worth £250,000, assuming they increased contributions by 2 per cent a year and achieved average annual investment growth of 6 per cent.

But staying in work and continuing to contribute until age 60 could boost the pot to nearly £362,500, while waiting until 65 could mean ending up with just short of £518,000.

Kimche says couples need to do their sums. He says: ‘It’s not just the size of the pot but how long it needs to last. Your retirement plan effectively runs from the older partner’s retirement to the death of the younger partner.’

Those entering drawdown – where you leave your pension savings invested and withdraw an income from the pot – should ensure their investment strategy can cope with this. Avoid choosing investments that are overly cautious if you are relying on that pot to support your spending for several decades.

Get clear on priorities

Kelly Atkins, 38, and Mark Jackson, 50, are saving hard for their wedding next year. But with 12 years between them, there’s another major milestone on the not-too-distant horizon: retirement.

The couple, who live in Upminster, Essex, and both work for a university, are saving hard into their pensions as well as making regular mortgage overpayments.

Kelly says: ‘We hope to clear the mortgage within ten years, then we could consider putting more into our pension. Luckily, our employer is generous and doubles what we put in, so our pots are building up quickly.’

Mark expects to retire in his 60s and while Kelly doesn’t think she’ll stop working at the same time, she hopes to retire before state-pension age.

‘It depends on work,’ she says. ‘I don’t want to be in a high-powered job where I need to be in the office by that point. It would be good to have something more flexible that would allow us to travel.’

The pair have a joint life insurance policy in place to cover the mortgage, and plan to ramp up their savings in the future when their two children are older. ‘It’s a long way off right now,’ says Kelly, ‘so it’s hard to plan. The main priority is being able to travel together and create life experiences.’

Family matters

For many people, children will form part of the equation. Couples are typically waiting until later in life to start a family, with the average age of a new parent being 31 years for women and 34 for men.

In 2025, some 1,126 babies were born with a father over the age of 60. That means plenty of people will enter retirement with children still in school.

Coles says: ‘This can be helpful if it means you can deal with the childcare and cut your outgoings. But you need to have planned carefully for how you can afford to raise a family on a pension income, especially if you might possibly be paying for university and helping them on to the property ladder too.’

Life insurance is worth considering, she says, ensuring a lump sum payout on death to a surviving spouse, which can help clear the mortgage, pay for childcare costs, or cover day-to-day family living.

Care costs are a worry for many people in later life and are particularly hard to plan for as it is impossible to predict who might need it and for how long. According to Age UK, residential care costs are around £1,100 a week, rising to £1,450 for a nursing home.

For couples, it will be assumed that half of any joint assets, such as savings or bank accounts, belong to the person in care and will be used to determine how much (if any) help they will get. Currently, anyone with assets above £23,250 must pay for all their care.

‘You can’t just give everything to your spouse because the council will consider this a deliberate move to avoid care fees – known as deliberate deprivation of assets – and charge you regardless,’ says Coles.

Instead, couples must consider ahead of time the most tax-efficient way to divide their assets. Taking professional advice can be a smart move here to make sure you don’t fall foul of the rules.

Now is also the time to think about lasting power of attorney, the legal document that gives you the authority to make decisions on behalf of your spouse if they lose the capacity to do so themselves. There are two types – health and welfare, and financial affairs and property. Each costs £92 and it is advisable to have both.

Ensure you have an up-to-date will written and that your pension beneficiary is up to date – this is the person who will inherit your pot when you die.

Defined benefit, or final salary, pensions may continue paying a reduced amount (often half) to the surviving partner but check the rules, says Lucie Spencer, a Society of Later Life Adviser at wealth manager Evelyn Partners.

She adds: ‘Many such schemes have a cut-off, such as if the spouse is more than ten years younger, they can refuse to allow them to benefit.’ Other schemes may rescind the benefit if you remarry.

Spencer says: ‘With a significant age difference, it becomes even more important to make sure that wills are up to date, powers of attorney are in place, and pension and life insurance beneficiary nominations are appropriate, as there is a greater chance one partner could survive the other for some time.

‘The surviving partner might be reliant on inheriting both jointly owned assets and those in the name of their partner to fund their later life.’