It’s been widely documented that future retirees face a very different reality to those currently retired, as people are living longer, and retirement provision has increasingly become an individual’s own responsibility.
However, what’s perhaps lesser known is the growing trend of multi-retiree families, which is quickly changing the face of retirement.
Multi-retirement families – that being, families with more than one generation retired at the same time – are on the rise and increasing faster than previously projected.
Research from St. James’s Place found that by 2029 there will be 963,000 families with more than one retired generation, which is 18% higher than the 813,000 multi-retiree families that exist currently. What’s more, over the next 20 years, there will be 60,000-100,000 more families than initially expected with more than one generation retired.
Naturally, this will place a strain on families’ finances. However, on top of this, future retirees are much more likely to financially support other generations in retirement than current retirees.
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In fact, one in two (55%) future retirees expect to do so, compared to just over a third (37%) of current retirees who are supporting others. As such, many of us face the reality that our retirement income will need to stretch across multiple generations, placing an even greater strain on finances.
Understandably, in the face of this, many will be reassessing their retirement plans to try and navigate a multi-retirement reality. Things can become even more complicated when you and your other half have an age gap that means you typically would be looking to retire at different times.
Discussing these issues early on in a relationship, at least well before retirement age, will make planning for retirement easier. Will one of you retire early, one late and meet in the middle? Or is one partner keen to hang up their boots as early as possible?
One thing for sure is that planning as a family becomes ever more important, because an age gap in a relationship will often mean that the other surrounding generations are at different stages of their lives, too – more so, when you consider second marriages and complex family structures.
Navigating a multi-retirement reality can be complex, but by taking proactive steps to plan for this, you can successfully navigate retirement while also supporting other generations, realise your retirement goals and support loved ones.
Tips on how to navigate a multi-retirement reality
1) Communication is key
This is especially true when you’re dealing with the likely prospect of a multi-retiree reality. Have an open and honest conversation with your partner and family about expectations in retirement – both in terms of what your ideal retirement would look like and who you’d likely need to financially support when you’re retired. This ensures that everyone is on the same page, and that you’ve identified your retirement goals.
2) Create a retirement plan
Once you’ve figured out what your ideal retirement would look like, it’s important to create a retirement plan that accounts for how you’ll support others during this time.
It’s also worth getting on the same page about when you both would like to retire and if one wants to retire earlier than the other. Also consider factors such as healthcare costs and long-term care costs, as these can add up fairly quickly and be costly.
It’s also worth factoring in inheritance planning and mapping out how you plan to pass down any assets you have. A financial planner can work with you to build your retirement plan and nudge you to consider anything else which you may have missed.
3) Balance supporting others with your independence
It’s understandable many of us will want to support our loved ones even in retirement, but it’s important to strike a balance with your commitments to others and maintaining your own financial security. Setting boundaries and communicating realistic expectations with your loved ones ensures everyone’s needs are met without sacrificing your own retirement goals.
4) Long-term care planning
As mentioned above, long-term care can be very costly and often people underestimate how much this will cost. It’s worth considering the possibility that yourself and potentially your partner may require this in the future. This can be exacerbated if your partner is significantly older than you, so it’s also worth planning for their possible long-term care.
To ensure you have enough to cover this in retirement, it’s worth looking into options such as long-term care insurance or setting aside funds for potential care needs.
5) Estate planning
It’s also worth creating an estate plan that clearly outlines your wishes for your assets for future generations. Consider setting up trusts or other mechanisms to ensure that your wealth is distributed according to your wishes.
If you and your partner have an age gap, you will also need to consider the likelihood of one partner being left behind for an extended time after the other one passes.
And consider protecting others in the family should there be blended families as well.
Claire Trott is divisional director of retirement and holistic planning at St. James’s Place
