13 November 2020
It’s time to talk about the future
Talking about money can be uncomfortable, especially right now, when for many of us, the future seems more uncertain than ever. But if you've chosen to share your life with someone, chances are your finances have probably already become intertwined. You may have a joint bank account, split bills, or share a mortgage.
It may be fairly easy to talk to your partner about short and medium term financial goals, like saving for a holiday or buying a house. Asking about longer-term finances, like saving for a retirement income or protecting your loved ones if the worst happens, can be much harder. These topics are often up there on the list of tricky discussions that many couples don’t make time to start.
Long term savings
There is no doubt that we all have competing demands on our finances and it’s often easier to prioritise short-term goals. Planning your longer-term future together now could make a huge difference in later life.
There are often practical things you can do to increase your long-term savings. Talking to your partner early on can help you get on the right track for the financial future you both want.
Here’s some ideas and questions to start the conversation:
- Are you paying into a pension scheme and if so, how much?
Knowing how much you’re both saving now is key to working out if you’ll have enough when you need to take a retirement income.
One way to get the conversation going might be to look at this website, from the Pensions and Lifetime Savings Association. It can help you work-out together how much you might need in the future and how much you should be saving now to get there.
- Are you missing out on matching employer contributions?
If you’re not making the most of employer matching contributions, you’re missing out on free money. You’re also missing out on government tax relief, so it’s worth discussing with your partner whether there is a way you could both organise your finances to make the most of these.
- What kind of pensions have you been building-up?
It’s useful for your planning to understand the kinds of long-term pension savings you have both built-up. If you have built-up any Defined Benefit pension you will have a good idea of the fixed amount of income it will pay out as pension when you retire. With Defined Contribution savings you won’t know how much you can take until much closer to your retirement age because your savings can go up and down throughout the time that they’re invested.
You can find out more about different types of pension scheme by clicking here.
It’s also important to keep track of all your pensions, even those you’ve built up from past employment. Click here if you want help tracing a pension that you’ve lost track of.
- What will happen if one of you takes parental leave?
If you’re planning a family, it’s useful to think about how it could affect your longer-term savings, especially if you decide to take a period of unpaid leave from work. When you return to work, you may be able to pay extra contributions to make up any savings gap. It’s worth thinking about your options and discussing these with your partner, to ensure that both of you can continue to save for the longer-term.
- Do you have any entitlement to the State Pension? If so, how much?
You can get a state pension forecast here.
And don’t forget, if something happens and you don’t stay together, knowing about your partner’s long-term savings is important. Often pensions aren’t even considered in separation and divorce discussions, but the older you get the bigger the size of your pension, so it’s always worth taking into consideration.
Protecting your loved ones
You may not have thought about financial protection for your loved ones should the worst happen, but right now is a good time to consider it. Whilst it’s not an easy topic to bring up with your partner, you really should know if you and your family are provided for if anything happens to them. A good place to start the conversation would be to ask:
Have you filled out an Expression of Wish form to let your pension scheme know to whom any death benefits should be paid?
Right now, many people say that knowing their loved ones have some financial protection is very reassuring. It’s important that you complete or update your Expression of Wish form so your pension scheme knows to whom you would like the relevant death benefits paid.
Hopefully these questions have provided a good starting point for you to speak to your partner about your longer-term financial future. Remember, open and honest conversations about money will keep you both on the right track to achieving your goals and ensuring your loved ones are protected. Don’t miss out on these positives by avoiding the conversation. The Money Advice Service has a great guide to talking about money if you need more help.
Read our other blogs in the Talk Money Week series: