Question: My spouse and I are both still working, but we are reaching an age where we are starting to think about our retirement as it is no longer in the far distant future. We are due to retire at different times and I’m curious as to how big an impact this could have on our finances. There will be a three-year gap between our retirement dates.
How do we manage our pensions and income, so we don’t run out of money too soon?
Answer: Retiring at different times can present financial challenges, but with the right planning, you can ensure a smooth transition and maintain financial stability. A three-year gap between your retirement dates means your income sources and expenses will shift over time, and coordinating them effectively is key to avoid depleting savings too quickly.
Available funds
The first step is to understand what income you will have during the period when one spouse is retired and the other is still working.
Having a clear picture of what funds are available will help ensure that you can cover day-to-day expenses without needing to rely heavily on your pension accounts right away. This also provides a buffer to avoid withdrawing from long-term savings too soon.
Plan pension withdrawals carefully: Pensions are one of your most valuable retirement assets and managing them wisely during staggered retirement is crucial. Ideally, the spouse who retires first should delay accessing their pension if other income sources are sufficient.
Allowing pension funds to remain invested longer can improve long-term outcomes.
When withdrawing, do it strategically: Consider drawing from tax-efficient sources first, such as cash savings or low-taxed investments, to avoid triggering unnecessary tax bills.
1. If the working spouse has a pension scheme, they should continue contributing to that, taking advantage of employer matches and tax relief.
2. A staggered approach to pension withdrawals can reduce the risk of running out of money later in retirement.
Adjust your budget: For the three-year period where one of you is retired and the other is still working, your household budget will change. The working spouse’s income may still cover regular expenses, but some areas might need adjusting.
Healthcare costs: The retiring spouse may lose employer-sponsored health benefits.
Tax changes: The working spouse’s tax situation may remain the same, but the retired spouse may need to withdraw income in a tax-efficient way.
Re-evaluate your budget
Re-evaluating your budget ensures that your spending aligns with your new financial situation, helping you avoid dipping into savings too early or too often.
Use the working years efficiently: While one of you continues to work, there’s an opportunity to reinforce your financial position ahead of full retirement. The income from the working spouse can be strengthen your long-term security.
1. Maximise your pension contributions: Continue to save while one partner is retired as this gives more security.
2. Build up cash reserves: A strong cash buffer can help cover expenses without dipping into pensions too early.
3. Review your investment strategy: Ensure your portfolio remains balanced between growth and security.
Coordinate social welfare benefits and tax planning: Staggered retirement also affects how you approach taxes and benefits. Coordinating your financial decisions as a couple is essential.
1. The retiring spouse should check when they qualify for the State Pension, as well as any other benefits or tax reliefs.
2. The working spouse might still receive tax advantages through pension contributions and spousal allowances.
3. Joint tax planning can help reduce liabilities, especially when one income is significantly lower.
Align your retirement lifestyles: One challenge of staggered retirements is lifestyle misalignment. One spouse might want to travel or take up new hobbies, while the other remains busy with work. Discussing expectations in advance ensures both partners are on the same page.
Seek professional financial advice: Every couple’s situation is unique, and professional advice can help optimise pensions, tax efficiency, and income sustainability. A financial adviser can develop a strategy to ensure your savings last and your retirement plans stay on track.
Martin Glennon, head of financial
planning at ifac, the professional services firm for farming, food and agribusiness.
What are the other income sources that can help tide you over the three-year gap?The working spouse’s salary or income.The retiring spouse’s pension payments (state and private).Any investment income (dividends, rental income, etc). Savings or emergency funds that can be used temporarily.
Question: My spouse and I are both still working, but we are reaching an age where we are starting to think about our retirement as it is no longer in the far distant future. We are due to retire at different times and I’m curious as to how big an impact this could have on our finances. There will be a three-year gap between our retirement dates.
How do we manage our pensions and income, so we don’t run out of money too soon?
Answer: Retiring at different times can present financial challenges, but with the right planning, you can ensure a smooth transition and maintain financial stability. A three-year gap between your retirement dates means your income sources and expenses will shift over time, and coordinating them effectively is key to avoid depleting savings too quickly.
Available funds
The first step is to understand what income you will have during the period when one spouse is retired and the other is still working.
Having a clear picture of what funds are available will help ensure that you can cover day-to-day expenses without needing to rely heavily on your pension accounts right away. This also provides a buffer to avoid withdrawing from long-term savings too soon.
Plan pension withdrawals carefully: Pensions are one of your most valuable retirement assets and managing them wisely during staggered retirement is crucial. Ideally, the spouse who retires first should delay accessing their pension if other income sources are sufficient.
Allowing pension funds to remain invested longer can improve long-term outcomes.
When withdrawing, do it strategically: Consider drawing from tax-efficient sources first, such as cash savings or low-taxed investments, to avoid triggering unnecessary tax bills.
1. If the working spouse has a pension scheme, they should continue contributing to that, taking advantage of employer matches and tax relief.
2. A staggered approach to pension withdrawals can reduce the risk of running out of money later in retirement.
Adjust your budget: For the three-year period where one of you is retired and the other is still working, your household budget will change. The working spouse’s income may still cover regular expenses, but some areas might need adjusting.
Healthcare costs: The retiring spouse may lose employer-sponsored health benefits.
Tax changes: The working spouse’s tax situation may remain the same, but the retired spouse may need to withdraw income in a tax-efficient way.
Re-evaluate your budget
Re-evaluating your budget ensures that your spending aligns with your new financial situation, helping you avoid dipping into savings too early or too often.
Use the working years efficiently: While one of you continues to work, there’s an opportunity to reinforce your financial position ahead of full retirement. The income from the working spouse can be strengthen your long-term security.
1. Maximise your pension contributions: Continue to save while one partner is retired as this gives more security.
2. Build up cash reserves: A strong cash buffer can help cover expenses without dipping into pensions too early.
3. Review your investment strategy: Ensure your portfolio remains balanced between growth and security.
Coordinate social welfare benefits and tax planning: Staggered retirement also affects how you approach taxes and benefits. Coordinating your financial decisions as a couple is essential.
1. The retiring spouse should check when they qualify for the State Pension, as well as any other benefits or tax reliefs.
2. The working spouse might still receive tax advantages through pension contributions and spousal allowances.
3. Joint tax planning can help reduce liabilities, especially when one income is significantly lower.
Align your retirement lifestyles: One challenge of staggered retirements is lifestyle misalignment. One spouse might want to travel or take up new hobbies, while the other remains busy with work. Discussing expectations in advance ensures both partners are on the same page.
Seek professional financial advice: Every couple’s situation is unique, and professional advice can help optimise pensions, tax efficiency, and income sustainability. A financial adviser can develop a strategy to ensure your savings last and your retirement plans stay on track.
Martin Glennon, head of financial
planning at ifac, the professional services firm for farming, food and agribusiness.
What are the other income sources that can help tide you over the three-year gap?The working spouse’s salary or income.The retiring spouse’s pension payments (state and private).Any investment income (dividends, rental income, etc). Savings or emergency funds that can be used temporarily. 
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