Pension Taboo Can Cost Women Dear In Retirement

Thousands of women over 40 face an impoverished retirement because couples overlook making financial arrangements if their partners die.

A fifth of women depend on their partner’s pensions in retirement, according to the latest research from The Prudential.

But four out of 10 couples never talk about their retirement income options and only one in 10 buy an annuity to guarantee an income for both partners for life, the study found.

An annuity is an investment that guarantees a fixed income from life and is generally purchased from the funds in a pension pot. Buying an annuity comes with single and joint life options that can ensure an income for the surviving partner if their partner dies.

In comparison, only 5% of men will rely on their partner’s pension income.

Pension poverty

More than half of couples over 40 have no financial plan to safeguard the surviving partner’s retirement income should the other die.

Only 19% have made a will, while 28% have not considered their partner’s financial status in retirement should one of the couple die.

The Prudential survey shows women are most at risk and that few have even discussed how they will generate a retirement income from their pension investments.

Many others (19%) cannot agree on their retirement income options, less than a third (30%) have made a decision and just 10% will buy a joint life annuity that guarantees an income when the first partner dies.

The research also reveals couples are confused about where their income will come from once they retire.

Avoiding talk about death

The Pru’s Vince Smith-Hughes said: “Couples should make planning their retirement income a priority long before the fateful day arrives. Funding a comfortable retirement involves organising and agreeing finances over the long-term and waiting too long could mean missing out on some of the best options.

“The research also highlights even those who have given some thought to their pensions and buying an annuity could leave mainly women without an income if their partner dies first.

“Talking about retirement finances rather than avoiding the issue is important even though some of the decisions can be tough.

“Talking the options through with a financial adviser can give some direction and sets some achievable goals as well as providing alternatives that couple’s may not have considered.”

Besides speaking to an independent financial adviser, or looking at the government’s free Money Advice Service website is a good way to start retirement planning, he explained.

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