Dealing with uneven pensions?

[weatherissweetenough]

If you're a long time married couple with very uneven pensions, how are you navigating/planning to navigate retirement?

The situation is this...DH had high paid job with very good pension and retired at 55. I've worked part time all along and done the lion's share of house stuff/bringing up kids/mental load.

I have a tiny pension that's worth bugger all as an income and will need to work until state pension (even that isn't full state pension due to P/T work)

We have a joint account for all household bills/holidays that DH pays into, i don't use that for personal expenses. I have my own account for my earnings but I also use it to buy household stuff/top up shops/take my turn buying meals out etc.

I could try and find a full time job now which would top up my NI and get me a better state pension, but it would impact both of us and the life we enjoy - we travel a quite a lot which I'm able to do with my job as it's very flexible. He would hate it if I worked full time and we couldn't go away when we wanted to, but I don't know what the solution is (I don't know what sort of job I'd get anyway, I'm not particularly well qualified for anything)

When I talk to him about it, he just says "it'll be fine, don't worry about money, we can live on my pension" but I do worry.
There's also a bit of resentment on my part that he's enjoying early retirement while I'm looking at working til I'm 70.

I don't know what the answer is (I don't even know what my question is really, I'm just worrying about my income in retirement and he isn't taking it seriously)

I agree with all this, you could really do with professional advice because there are several different "what ifs?".

You could both live long and healthy lives and have sufficient to live on but what happens if eg your DH needs care? 50% of savings held jointly would be taken into account and all of his income would be looked at.

As it stands at the moment your DH doesn't need to worry about it because he's holding all the cards. A nice lifestyle facilitated by you, he's got the financial security of a good pension but you haven't but that's not directly affecting him is it?

I think you do need to get advice OP, from bitter experience of a family situation. If anything happens to him you will really struggle, not least because if the bills are coming from a joint account you will be liable for them with less income, but if his pension is paid into his own account and he pays the bills, in the event of his death you will not be able to access the account until the estate is sorted out which will leave you in debt.
I would suggest that you keep the joint account for bills and it is managed by standing order from his account. I'd also suggest he pays you a monthly amount by standing order so that you have a more equitable income, or if that's not possible he gifts you a large portion of his lump sum so that you have more financial independence, and you can access the interest.
You will need independent advice and I would approach an accountant and not someone attached to banking or financial services as they will invariably try to sell you products.

Additionally if he pays you monthly this could go directly into savings in your own name.

DH and I have always had unequal incomes and he has a bigger pension than mine now. It hasn't caused an issue for us - we split our incomes into various pots which are a bit convoluted (we don't have joint accounts as the tax admin is easier if we keep them separate). But we view all our money as a big pot and I've never felt any guilt about spending on myself from any of them (I do the majority of spending on a credit card which is paid by DH). I think it's more about attitude and how you view your role in the family.

We retired at the same time and DH would never have wanted to retire before me - the whole point of early retirement was to spend more time together. We both have full state pensions.

I have a lot of the assets in my name as it has been more tax-efficient. I'd be left with enough if DH died early or needed care.

You don’t need to work full time to get full NI contributions, you have to earn £242 a week.

Check how many years you’re missing. You can buy back missing years. The further back, the cheaper they are.

It's too late now but the solution is to always make extra payments into the SAHP or part timers pension out of the household finances, and consider it part of the budget when deciding if you can afford for one of you to work less.

You spent years giving free labour to enable him to work and build his pension, that money is yours as much as his and you should both enjoy the same benefit and retire at the same time.

Until April you can pay to top up any incomplete national insurance years since 2006, might be worth doing (and him paying for).

We're only in our 40's so pensions are a way off but we'll treat it the same as we have our incomes whilst we've been working - all money is family money.

We've had spells over the years where one or other of us out earned the other and now (and likely until retirement) DH out earns me substantially. This is currently primarily because I'm part time since I had DD, our incomes would be similar if I was full time. However I'm likely at roughly the peak of my earning capacity whereas DH is still going up the ladder so he has capacity to accrue much more than me, He also has a much better pension due to his first company still having a defined benefits scheme, so we ploughed as much into it as possible to maximise the benefit of what they offered.

You say he's not taking it seriously but he has said he will have enough income to support you both so I'm not sure what else you expect from him?

Surely if you want a bigger pension you need to work more to earn it? I wouldn’t be comfortable expecting to live off someone else’s pension. You never know what the future holds. How will you survive financially if he dies or leaves?

When you say you only worked part time, have you checked gov gateway, to look at the full years and checked the earnings threshold criteria?

@weatherissweetenough when you say the minimum state pension do you mean £221.20 or 10 years I.e. £63.20?

Being pragmatic you need to get your state pension entitlement as high as possible. Sorry, but if your DH dies before you, you may need it. You need to think about how much of his pension you would get as his widow.

If you are working part time please check your NI record and see if any years are part paid, it will be worth paying the difference to make a qualifying year.

I agree with pp, his pension should be shared as you are or should be a partnership. You sacrificed your pension to benefit the family.

This sounds like a "you" issue though? Your DH is apparently quite happy for you both to live off his pension, it's just you not wanting to use what you see as "his" money (rather than a joint pot) to buy clothes, etc. Why are you still working? That's not a snarky question, just a genuine query? Are you working because that income plus additional pension benefits is built in to your joint retirement planning, are you working because you want to (it doesn't sound like it?) or are you working because you can't bring yourself to rely more on your husband?

Your situation sounds very similar to ours, DH retired early (not at 55 though!) with a very good pension and other investments. I also retired more or less at the same time and won't reach state pension age for some years. However, we both see all money as joint - like you I did the bulk of the child-rearing, parenting etc which allowed DH to work long hours in the City, do work travel etc. That's partly what has allowed him to retire now! So for us, it's just fair that until I get my small pension, my expenditure is coming mainly out of "his" pot. I do have some small shares etc in my own name which I am selling off so that if I really want to feel some independence in buying him gifts, going on girls' trips etc I can do so but otherwise we just spend from that joint pot.

I have several thoughts on this:

• Unless he is too ill to work, I can't see how it's fair for him to retire at 55 and you at 70! If you're (rightly) resentful now by 15 years time it would be untenable. You should look into financially whether you can retire sooner.
• You need to understand what would happen if he were to die - would you get a pension of (for example) half of what he gets?
• My wife and I have a relatively large age gap but even though we are 15 years away from me retiring we are already planning around how it will work so that she can stop work at broadly the same time as me.

@weatherissweetenough i became a SAHP and have never been able to return to work due to ill health so my husband has contributed to a private pension for me. Did you and your DH never talk about future plans before he chose to take retirement at 55? The very least he could have done is bought NI missing years if you were significantly lacking. Do you actually know why he feels so confident about future finances? Have you done a pension forecast yet, once you have this you and your DH need to sit down ,crunch the numbers and what you each expect from your lives during retirement and talk!

From what you've written it sounds as those your DH has said you are welcome to spend from the joint account but you'd prefer to have your own money. So it seems like you are choosing to work until 70 instead of have to work....

You need to check your status on state pension, unless you've worked very very part time or cash in hand you should have NI contributions from that time and when claiming child benefit.

I would look into what will happen if DH dies. If he has an annuity will it die with him or provide for you? Are you the beneficiary under a DB scheme?

I'm in my 40s, and not married so maybe a bit more on the ball with my pension since I'd have no claim over DPs if we separated but I earn less atm as p/t. DP's employer contributions are better so I pay a much higher % of my salary than he does into my pension to try and keep them fairly level. My 'pots' are in riskier funds so performing much better than his. I also pay into a s&s ISA which would legally be my money in a split (but he's the main beneficiary in my will).

Otherwise all our money goes into our joint account and unless we're planning on buying something really expensive (in which case we'd discuss it) we just spend what we want when we want which i assume will continue to happen during retirement.

It’s joint money. Don't see the problem, tbh.

Posters who are saying that all money is family money really should check their pension and retirement income. Although technically marital assets are shared this is mainly applicable to property and any savings- in practice if your DH dies you will lose his pension income apart from any survivor's pension which will be tiny.
I also think that people who are critical of retirement at 55 don't understand that often that's the only option on the table when employers are cost cutting - redundancy over 50 is no fun.

I’ll be the one with the bigger pension as I’ve worked in the public sector for 23 years so far (apart from 3 years at uni in my twenties) He, on the other hand, tried being self-employed for ages and then worked at a few places with crap pensions. He’s now got 4 years (and counting) of a public sector pension.

Anyway, we’ll just do what we do now. All monies into our joint account and an equal amount out for fun money. I honestly can’t understand couples who do any different 🤷‍♀️

We also plan well hope to take early retirement at the same time even though he’s two years older than me.

As others have said you need to look at various scenarios, including the worst case of your dh dying, and see what your pension income is.

I have known couples take the 25% tax free lump sum from the higher earner's pot and use it (over time, as there are limits) to buy more pension for the lower earner - you get even more tax relief that way.

I am the higher earner in our situation. Because I’ve always been self employed it has always been more practical to have separate finances and we have always lived off my earnings. It’s now the same with pensions but if anything happens to me DH will have ample money to live off with 50% of my pension and state pension combined in addition to savings.
If DH goes first I will get his total drawdown pension to add to savings. Although if he’s over 75 then it will probably be taxed.
We have always had five year plans and were fortunate to be able to bring forward out retirements when I sold my business. We used the profit to live off for 5 years. DH had some savings and I carried on working but very part time. We’ve also done a lot of work on the house to reduce running costs moving forward.
it would have been nice to invest the money but Covid hit, I went through breast cancer and DH had a stroke. So overall it was the right thing to do.

We still have healthy savings and my pension is due for a big uplift due to the NHS remedy, part of my pension is in the later scheme but will be moved into my original scheme over the next 12 mnths with another lump sum and back payments.
We have a small mortgage to pay off at some point but by 67 we’ll be mortgage free and dependent free ( DS is at uni currently).
I have a small private pension which I will convert to drawdown at some point and use it to top up when I stop working totally, probably when DS finishes in education.

It’s all about planning and expectations. Lower income from pension is offset by lower living costs. Investing in money saving appliances and replacing older lest economic and echo friendly appliances will cut living costs longterm.

I’m always looking for ways to reduce costs but I have the time now to search out the best deals and fine tuning outgoings. It means that we don’t have to stint on the everyday costs such as food and entertainment.

The life choices we made in the past such as private education and maintaining a second home ( inherited) mean that we often had little money for luxuries. And committing to investing in pensions has paid off, we nearly didn’t benefit, due to health problems, but it is now all the more important that we made those sacrifices now our ability to work is limited.

My DSis died last year, unexpectedly due to cancer, she had only just reached 56 and had not taken her pensions. You have no idea what the future holds and need to be absolutely secure in planning that you are able carry on if anything happens.

This!

With is everything is even. What's mine is DHs, what's his is mine. We have a joint account. We have our own ISAs and pensions, but only for tax reasons. All on a spreadsheet, updated monthly, so we know where we are. The only downside is it makes it difficult to buy a surprise for the other, so we have a small balance each in a single current account, otherwise all is open. There are no arguments over someone having more than the other, and we always discuss big purchases.

My workplace pension is only 1/3rd of DH's - I had to give up work to be a carer. All money is joint money and always has been - although some of it is in sole accounts for tax purposes, but still considered 'ours '. Even though I got NI topped up due to claiming Carers Allowance, I'm still a couple of years short for full state pension. I fully intend to make up these missing contributions from joint money.

I'm not really sure why you're considering working to 70 and going full time when your DH says you don't need to.

Yes, I also think most couple would plan to retire at the same time, and to do whatever would be needed to make that happen.

I'd look at buying missing years re your state pension. And I'd also look at saving more into a private pension for you.

The Retirement living standards website might also be helpful -

www.retirementlivingstandards.org.uk

It doesn't even need to be as high as £242, she would get Class 1 credits from a threshold of £123pw (the lower earnings limit). It would be lower in previous years too.