Home Lifestyle Growth in cohabiting and single person households turns retirement planning on its head

Growth in cohabiting and single person households turns retirement planning on its head

by jcp
gawdo
  • The number of families that include a couple in a legally registered partnership in the UK has increased by 3.7% in the past decade, to 12.7 million.
  • However, the number of cohabiting couple families saw an increase of 22.9% over the same period, to 3.6 million.
  • The number of people living alone in the UK has increased by 8.3% over the last 10 years.
  • Different living arrangements can bring different financial challenges.
  • ONS data out today showed only 52% of single retired people earn more than they spend, compared to 78% for couples.*

Today the ONS has published UK Families and Households data Families and households in the UK – Office for National Statistics (ons.gov.uk)

*ONS has also published income spending and wealth information Income, spending and wealth: how do you compare? – Office for National Statistics (ons.gov.uk)

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown:

“The UK’s living patterns continue to shift, with the number of people choosing to cohabit soaring over the past decade. Some of these couples will go on to marry but others will have no intention of doing so. We’re also seeing the number of people living alone continuing to grow strongly and, in places like London, one person households account for more than a quarter of all households.

These shifts turn traditional financial planning on its head. A cohabiting couple has different rights to one that is married or in a civil partnership, while a single person needs to make further provision to secure their financial resilience, and this can cause challenges.”

Cohabiting

Many people operate under the assumption that once you’ve lived together for several years you acquire some kind of common-law marriage status. This isn’t true and cohabiting couples can be at real risk of financial detriment should one partner die. Many pension providers will pay out death benefits to a cohabiting partner, but it isn’t guaranteed and so it is vital that expression of wishes forms are kept up to date to make sure the right person gets the pension should the worst happen. Keeping wills updated is also key in making sure your partner is provided for and your financial wishes are respected.

Living alone

More of us are living alone and this presents its own financial challenges. The Pension and Lifetime Savings Association’s retirement income standards say a single person needs an income of £20,800 per year to live a moderate lifestyle in retirement while a couple needs £30,600. This shows single people have an extra mountain to climb in terms of achieving financial resilience in retirement.

Small shifts, such as upping your pension contribution whenever you get a pay-rise or move jobs, can really boost your pension and you should also check to see how much your employer is willing to contribute to your pension to make sure you get the most bang for your buck when it comes to retirement. This can be very difficult at times like these when the rising cost of living is putting everyone’s finances under pressure.

For many people, living alone isn’t a long-term thing but for many others it will be, and the reality is they will need to contribute more to their pensions to enjoy the same standard of living as couples.

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