Mind that Gap

There are numerous examples of celebrity relationships with a large age gap between partners (Michael and Catherine, Woody and Soon-Yi, Calista and Harrison) and such relationships are increasingly common throughout society. The success of any relationship relies on good communication and negotiation of differences so the needs of both partners can be met. Financial issues due to age differences are among those that need to be resolved.

As a general rule, risk aversion increases with age. Attitudes towards risk and investment time frame are key determinants of investment strategy and it may be that with an age-gap couple, each requires their own portfolio. Older partners are often in a position to teach the younger ones good financial skills and habits, as well as providing financial security.

The retirement of one partner can present issues. The younger partner may be forced to keep working in order to bring enough income into the household, or alternatively, may feel pressured to give up work in order to spend time with the aging retiree. Being reliant on the younger partner’s earnings can be disastrous if either partner becomes ill and needs care.

It is typical for an older partner to become concerned about the long term future of the younger one and be reluctant to spend his or her retirement savings. An older partner may also worry about what will happen to their wealth in the event that the younger one enters a new relationship later in life. Where there are children from previous relationships, there can be conflict regarding the availability of inheritances, as often the surviving partner takes precedence over the children, who may be of a similar age.

None of these issues are insurmountable with the right advice, and in the end, it is love which is important; not money.