Marriage IS NOT A Retirement Plan.
You need your own pension plan!

When thinking about retirement, most people imagine spending their golden years with a spouse.
However, relying only on marriage for retirement can lead to significant financial pitfalls.
It is important to understand the potential risks this thinking carries and take steps to ensure both of you will be financially secure when retirement comes.

This article will explore why depending entirely on your marriage for retirement planning can be a financial mistake and offer practical advice for safeguarding both your futures.

"My husband (or future husband) will take care of it."
It's amazing how many independent, maiden name-keeping women secretly rely on a current or eventual marriage to take care of their retirement needs.
But, many things can go wrong with the "he'll-take-care-of-me" strategy.

Some woman don't marry and many married women eventually divorce. Even those whose vows last a lifetime may find themselves in situations they didn't expect. Their husbands may lose their careers to downsizing or disability or other misfortunes.

No matter where your money comes from, make retirement planning a priority as an individual.

Don't rely on your husband to contribute towards your retirement benefits: take responsibility for your own retirement.

A number of people, more often than not women, find themselves in a financial predicament at retirement age when they can do little about it.
The divorce rate is getting ever higher, and often includes couples getting divorced near or even after retirement age.

Women should take accountability for their retirement planning irrespective of whether they are single, divorced or married.

Risks of Divorce and Separation

Life is unpredictable and facing would widowhood or divorce is not a pleasant subject to address. Both situations involve extreme emotional turmoil and complex financial issues. But ensuring that you receive a fair share from the dissolution of your marriage is vital in maintaining stability and securing your financial future.

Divorce rates are high, and the financial consequences can be devastating.
Approximately 40% of marriages in end in divorce within 10-years, leading to the division of assets, including retirement savings!
Protecting your long-term investment plans is vital.

The only way to protect your financial well-being is to become informed about your rights.

Know your legal rights on Divorce
The division of the matrimonial assets depends upon your marriage regime which can be any of in community of property, out of community of property without accrual and out of community property with accrual.
A full understanding of which regime applies to your marriage is crucial in determining how the assets will be divided.

Know your legal rights as a widow
The deceased estate distribution will be influenced by the terms of the last will and testament.
You need to make sure now that you are familiar with the terms of your matrimonial regime and your partners will.

Consulting a lawyer is essential in a divorce to negotiate a fair settlement.
If you are facing a divorce action you need to consider the status of any joint accounts.
You should immediately close or separate these accounts to prevent any future misuse.

Appointing a professional an experienced executor will also speed up and secure your rights from the late estate.

Financially Independent and Personal Savings

One of the most important aspects of financial planning within a marriage is creating and maintaining personal savings.
While joint accounts and shared savings plans are important, having individual retirement accounts is vital. Only in this way will each partner have a financial cushion in case of unexpected life changes, like severe illness draining joint savings and leaving the unaffected spouse with no retirement capital.

Separate Retirement Investments offers several benefits. It allows each of you to have control over your finances and provides each with tax advantages like Retirement Annuities investments.

Career Changes

Life changes either through retrenchment or career changes will significantly affect retirement plans.
If one of you loses your job or decides to switch careers, the financial burden may fall disproportionately on the other, greatly affecting both your future plans.

Financial Infidelity involves one partner hiding financial information, such as debts or spending habits, from the other.
This will lead to financial problems and erode trust within the marriage. Hidden debts and secretive spending will drain joint savings and leave both of you unprepared for retirement.

Debt in a marriage means one partner takes on another partner’s debt.
That can significantly impact retirement planning so it's important that couples are transparent about their financial situations in order to work together to manage and reduce any debt.
High levels of debt will hinder the ability to save for retirement so an effective debt-strategy plan to pay off loans and credit card balances is extremely important.

How to Create and Maintain Financial Transparency.

You both need to have regular financial discussions on your financial situation, goals, plans and progress towards them.
All aspects of finances, retirement savings, debts, and investments need to be aired.
Set aside time to discuss your plans and ensure you are both on the same page.
This helps prevent misunderstandings and ensures that both partners feel heard and respected.

Couples often have different approaches to spending and saving. Finding a middle ground and respecting each other's perspectives can lead to a more harmonious and secure financial relationship.
Set both joint and individual financial goals.
Plan for shared experiences like travel and leisure in retirement and ensure that each of you has individual financial security.

You need to create a new budget based on your changed financial situation, and should prioritise essential expenses and find ways of reducing unnecessary costs.
As a widow you may have additional expenses like funeral costs so plan accordingly. You need to decide on how you will allocate your combined resources, including what your retirement savings will be.
Your budget must prioritise an amount for your future pension savings.

Planning for your Retirement Income by considering the various income streams you have for for retirement like pensions, investments, and savings.

Married couples face decisions on whether they should structure individual or combined retirement plans.
While a joint plan will result in simplified management and potentially lower costs, individual plans offer way more security in addressing the future threats that marriages face.

Diversify your Retirement Investments through having multiple types of retirement products like Retirement Annuities, Endowments and Unit Trusts. This will provide a more robust financial foundation for both of you.
Diversifying ensures that you're not putting all your eggs in one basket, which can protect against market fluctuations and other risks.

Starting and keeping a Retirement Annuity going is a good option as it is not only important for the self-employed woman, but also for the woman married in community of property. If her husband's business is forced into liquidation, creditors have no claim against her RA.
Pitching money into a joint retirement nest egg account with your husband may feel cosy, but it's not a money-savvy move.

The attitude and approach of women to financial planning might be different, but when it comes down to the products - they're unisex - a pension is a pension, whomsoever buys it.
You do need an Emergency Fund to pay unexpected expenses without dipping into your retirement savings. Aim to save at least 3 to 6-months' worth of living expenses in a separate, easily accessible bank account. This fund pays for medical emergencies, job losses, or other unforeseen events without affecting your retirement plans.

It is highly recommended that you use a professional financial adviser to help you create a comprehensive retirement plan that involves both joint and individual goals and clarifies strategies for managing and growing your investments.

You may also require both emotional and practical support, which is beyond the scope of this article.
Please be aware of any signs of requiring help in this area.

So, where to start?

Assess Your Current Financial Situation

Know your financial situation
Forewarned is forearmed and that means you need to understand your financial situation at that time. You need to keep a detailed record of audio assets, dates, sources of income and expenses. You need to be familiar with bank accounts, investments, property, retirement investments and insurance policies for both of you.

Securing your fair share
You need to collect all financial documents including bank statements, tax returns, investment portfolios, property deeds and insurance policies and secure them in a safe and accessible place.
This information will form the foundation of both a divorce proceeding or estate determination. Then, work out your net worth.
Subtract your liabilities from your assets to get a clear idea of where you stand. This figure will guide your future financial decisions.

Define Your Retirement Goal. Ask yourself questions like: Where you would like to travel? What hobbies would you pursue? Do you want to work part-time? Where would you want to retire? How about time spend with grandchildren?
Understanding each other’s goals can help you create a plan that accommodates both of your wishes.

Then, break down your retirement wishes into achievable short-term and long-term goals. For example, Jane aimed to pay off her bond in ten years while simultaneously building a travel fund. These are the foundations for Creating a Comprehensive Retirement Plan.

Build an Emergency Fund by saving 3 to 6-months of living expenses into an easily accessible bank savings account.

Manage and Reduce Debts by paying off these debts to free up more money for your retirement savings.

Plan for Medical Expenses as these do increase as we age and can be a significant burden in retirement.
Consider taking out a Long-Term Care Insurance plan to help cover the costs of extended medical care, which is not typically covered by medical aid.

Review and Adjust Your Plan Regularly.

Wills and Trusts.
Estate planning will protect your assets and ensure they are distributed according to your wishes.
Both of you should have individual wills and could consider setting up a trust to manage your estates effectively.

Power of Attorney and a Living Will ensure that your financial and health care decisions are handled according to your preferences if you become unable to make those decisions yourself.

Make sure you are not cut out of his will or trust fund.
Are you still the beneficiary on his insurance policies
Have you changed your will?

Let this be a wake-up call to the Second Wives Club: Make sure your husband is leaving all his property to you.

Concerned about your future welfare?
Don't leave your concern here, email me for advice - no obligation!

083 655 2164

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Peter Pyburn - Authorised Financial Services Provider, fully licensed to render financial services since 1991. Death and Disability Planning; Retirement Planning; Investment Planning; Healthcare and Estate Planning. More...

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Last update: October 2, 2024