A Guide to Protecting Your Finances in Retirement with Your New Partner

It’s a subject that is not discussed nearly as much as it should be, but for senior citizens that are finding romance and companionship, money matters are a critical discussion point, and the expectations and way these things work have changed.

For example, 75 per cent of Australians agree that prenups are a good idea for protecting finances in the event of a relationship breakdown. Traditionally these were unheard of, and even today, only 18 per cent of Australians have one, but this number is growing as the cultural dynamics around relationships shift.

Meanwhile, senior citizens are also more frequently the target of financial abuse, making it all the more important that they protect their financial well-being right from the start of a relationship. Senior citizens are considered to be a trusting demographic, which makes taking advantage of them – particularly with financial matters – a cruelly common practice.

So, while we recognise that the need for companionship never goes away, and for many and varied reasons seniors are often more active on the dating circuit than those in the younger demographics, it’s important that they also understand how to protect their financial interests.

Do this first

The first step before allowing a relationship to reach the point that finances are combined and shared is to talk to a solicitor, accountant or financial planner – preferably one that you have a history with and who understands your financial history and background. As you transition into retirement, it’s also important to have a full understanding of your financial rights during retirement, and how they may change from your working life, for which the Australian Human Rights Commission has plenty of useful resources.

From there it’s important to sit down and have a proper conversation with your partner. Discussions about money can be a sensitive topic, but being frank and open from the outset can “clear the air” and ensure minimal tension in the future.

There are four key discussion points that need to be addressed in this conversation:

1)     What are the financial goals of each person, and would they rather spend money on travelling and hobbies, or investing? What kind of budget is necessary for achieving these goals?

2)     What is the financial situation like? What money (if any) does each individual owe, and what exposure and risk do they face? Does combining finances even make sense if it will expose one person’s finances to new risks?

3)     If one of you is a natural spender, and one is a natural saver, where is the common ground? If you’re both inclined one way or another, how will you keep your financial situation healthy while maintaining a comfortable lifestyle into retirement?

4)     Will one person be the financial “controller” who handles the bulk of the finances, and what rights should the other person have to the money?

With those questions answered, you will be better and more securely positioned to move forward financially as a couple.

Red flags for financial abuse

It’s important to keep an eye out for financial abuse – both for yourself and for anyone that you might care about. In many cases, those perpetuating financial abuse rely on the conversation about the abuse being too difficult to raise to continue getting away with it.

The biggest red flags that financial abuse is occurring are:

1)     Someone is taking out loans and incurring debt in another person’s name (so, in the case of a couple, one person is using their partner’s name to set up credit cards or take out loans)

2)     Another person has access and control over your bank accounts and household money – this is particularly relevant if the person whose money it is unable to access it when they want it.

3)     Someone is selling property and/or assets without the owner’s permission.

Of course, there are times where these red flags are not direct proof of abuse. It’s entirely possible that a trusted partner will be managing the finances responsibly and without abuse. However, where it is observed it is worth investigating further.

Finally, it’s important that there is an “exit strategy” in case the relationship turns sour, or financial abuse is observed. This exit strategy can take any number of forms – including a prenup, but the basic idea is that whatever the solution, at the end of it you will have your financial independence back and your money is secure.

None of this is meant to frighten people away from romance, of course. Companionship is a worthy pursuit at any age, but it’s also important to protect yourself, as even if you’re in complete alignment on financial matters at the start of a whirlwind romance, circumstances can change and you shouldn’t put yourself at risk if they do. Speaking to a financial planner, lawyer or trusted accountant with your partner is the right first step towards giving everyone – including the extended network of friends and family – peace of mind that you’re safe and comfortable financially.

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