Ill health, retirement, and protecting myself

[vitaminseal]

I have NC for this and run through AI for clarity. Sorry if it is a bit long.

I’m 53 and, over the past few years, I’ve been diagnosed with two serious health conditions. Hopefully they won’t shorten my life, but they do affect me in several ways and limit what I’m able to do. I’ve been off work sick for several months and am unlikely to return (that bit isn’t really up for discussion, and it’s not the focus of this post).

DH and I are very happy together and have always treated our finances as shared. He’s a little older than me and has generally earned more, partly because of his industry and role, and partly because I took on most of the childcare when our children were young, so my career never flourished like his.

We’ve always shared what came in, including salaries, bonuses and inheritances. He received more in bonuses, while I inherited more. As he’s usually been a higher-rate taxpayer, we’ve tended to prioritise his pension contributions for tax-efficiency reasons.

Around the time I was diagnosed, DH was made redundant. He received a reasonable payout, most of which he put into his pension. He hasn’t returned to full-time work and has been caring for me.

As I prepare for the possibility of losing my job, we’ve been reviewing our finances. I’ve also posted in a couple of online groups for people going through something similar. Several people have advised me to protect my financial position, pointing out that a seriously ill partner can sometimes be left, even in relationships that seem solid.

I don’t believe DH would do that, but I can’t say it’s impossible. I’ve seen friends get hideously screwed over by men who seemed like good husbands until they really weren't, so I feel I should at least think through the possibility.

We have a financial adviser, but he was originally DH’s adviser through his former employer and has only recently started advising us jointly. I’m not confident he’d consider how to protect my position in a potential divorce, even if I raised it directly.

Could anyone offer some advice?

Our current position is:

• I have several pension pots from previous jobs. One has a protected retirement age of 50, so I can access it now. I may be able to access the others early on ill-health grounds. Even so, the income from them wouldn’t be enough to live on.
• DH can access his pension now and is in the process of crystallising it and buying a joint-life annuity.
• We have savings and investments, nearly all held in DH’s name. I know roughly how much there is and where it’s held.
• We own our home jointly and have now paid off the mortgage.

If DH were to end the marriage, what risks should I be aware of? Is there anything I should be doing now to protect myself from these risks?

As you're married, it shouldn't matter too much what names the various investments and assets are in. In the case of divorce everything goes into the shared pot for division.

How long have you been married for?
assuming it is a lengthy marriage then broadly speaking assets are joint

We've been married for 26 years.

As you're married, your assets will be counted as marital assets and will form part of the financial settlement if you split up. That includes pensions too. That's why it's important to get married to protect yourself financially!

are all the investments via UK platforms, ditto savings, do you have access to them so you could see any movements?

as others have said, in a long marriage you would expect everythjng to be in the joint pot, the issue is transparency.

I would also ask explicitly to unserstand the implications of the joint life annuity + scenarios like what if you need significant care?
what is the income projected to be from that joint life annuity?

Yes the savings and investments are all in the UK. I don't have access to them directly but I know roughly what's there now and how much is in the pot.

We have a shared finance spreadsheet with our various savings on it and I have occasionally printed that out.

The joint annuity would give about £2k a month after tax. It will be paid to DH but 100% transfers to me should he die before I do (another fun scenario that we are having to consider). I don't actually know what would happen to it should we separate - I will look into that.

Thank you to everyone for comments so far.

I am disabled following an accident.

i divorced after a long marriage of 22 years in 2023.

marital assets after that amount of time and with children are basically joint.

our assets were split broadly in half - I gave up a bit more pension to get more cash now to buy a house.

as you are married and it is a long marriage in the event of a split you are fairly well protected.

@Octavia64 I'm sorry to hear of your experience and hope you are doing ok. It's reassuring to hear that the various assets were basically split between you.

My DH of almost 20 years left during a time when I was suffering a serious illness. We haven't reached a financial settlement yet but I am assured 50:50 is the starting point. Neither of us have much to share out.
I'm sure your DH is a much better person, but when i was online a lot during the immediate aftermath it became clear my story wasn't unusual!

@eewwdavid I hope and believe that he is, but I know that statistics show that your experience is far from unusual. I'm very sorry it happened to you.

I was quite confused what question you were asking?

Then I realised, it sounds like you don’t know it’s always a 50-50 starting point

If you end up going to court, then there might be some technicalities, but unless there’s a case of years of you not working or something, I think it’s fine. Just think of it as 50-50.

I read it's a 50-50 starting point but then you are always hearing people say "protect yourself, have your own money" etc. Not least on here.

With crappy health and likely zero earning ability, I am just trying not to be naive. We deliberately piled a lot of money into DH pension and I don't want to be ignorant of any safeguards that I could put in place now as we make our financial plans for the future.

I very much hope never to need it but I bet everyone says that.

Always best to be prepared for all eventualities. And although divorce in circumstances like yours is likely to mean a roughly 50:50 split of assets, it can take time to finalise things. So the 'have your own money'advice is at least partly to bridge the gap between splitting and agreeing the division.

Also consider what happens if you don't split. Your husband getting a large private pension, plus the £2k/month annuity income, plus at some point state pension sounds likely to push him into the higher rate tax bracket again. Splitting the income between you is likely to be more tax efficient.

Same with the savings and investments. If they're not held in pensions/ISAs those will be taxable, so you should be splitting them to use both of your allowances.

[Edit: This is something your financial adviser should have been looking at with you.]

Thank you. I would never have believed mine to be capable, he was literally having an affair while I was signed off sick and stuck in bed