Retirement planning is not easy, and it’s made even harder when there is a significant difference in age or health status between two partners in retirement. It is not uncommon to have an age gap of ten or more years, or for one partner to have a life-threatening or debilitating illness. In these cases, the older or less healthy person may have concerns about the future welfare of their partner once they are gone. Meanwhile, both partners will want to make the most of the few good years the couple might spend together.

One of the options to consider is early retirement for the younger or healthier partner. It is possible for both partners to receive NZ Superannuation when only one is aged 65 or older. However the superannuation payments for both partners will be abated by 70 cents in the dollar for every dollar of combined income in excess of $100 per week. Alternatively, NZ Superannuation can be paid only to the partner who is aged 65 or older. In this case, savings will need to be used to provide an income sufficient to live on. For example, providing a top up of around $15,000 a year (the equivalent of NZ Superannuation for one married person) for five years will use up around $75,000 of retirement savings.

Where there is an age or health gap, a couple usually wants to be able to spend more of their retirement savings in the early years of retirement, while still ensuring that the surviving partner will have enough to live on later on. One way to solve this problem is to invest a lump sum in an annuity product that will guarantee an income for life for the surviving partner. Other funds can then be used to enjoy the retirement years spent together.