Shouldering Retirement Savings Solo: How to Navigate When Your Partner Won’t Contribute

"Don’t let me hear you claim that life isn’t going anywhere," David Bowie sang in his 1970s classic "Golden Years." In truth, as time moves forward, your career will ultimately reach its conclusion.

This finds Jada, who is 52 years old, grappling with the existential fear of retiring, despite her intention to continue working until she reaches 65.

Nevertheless, she has been setting funds aside for her retirement since her mid-twenties. However, as her earnings increased with time, she began allocating 10% of her annual income towards this savings goal.

Even though she's excelling at saving money, her spouse of two decades hasn't set anything aside. anything For retirement — and he has no plans to do so. Instead, he intends to rely on his pension and retirement benefits such as the Canada Pension Plan (CPP), alongside Jada’s savings, to fund their later years.

Jada is concerned that he might not grasp how much they'll require during retirement and feels bitter that she's making all the sacrifices for their future.

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What would happen if your partner isn't putting money away for retirement?

There’s no rush to seek out the shadows just now. However, you should begin a dialogue — which may be more challenging than it seems at first glance. As stated by the RBC 2024 Relationship and Finance Survey , 77% of participants indicate that finances cause tension in their partnership.

These talks can be challenging as both partners might have varying opinions on savings amounts. Furthermore, the same survey revealed that 47% of participants felt they were more adept at managing money than their significant other, potentially increasing stress during such conversations.

Jada and her spouse might begin by confirming they share similar objectives. Perhaps Jada envisions volunteering or working part-time, whereas her husband sees retirement as an opportunity for extensive traveling. Regardless of their individual aspirations, they should engage in a candid discussion to align their expectations regarding this new chapter in life.

However, it's crucial to be highly attentive. How much additional funds they will require? To achieve these objectives, a common guideline is to target approximately 60% to 80% of your income earned before retirement.

If Jada and her spouse are struggling to communicate or have trouble analyzing their finances, they might consider seeking assistance from a financial advisor.

However, it's not solely about mathematics. They might also consider examining why Jada’s spouse isn't saving money. Taking this into account, the query becomes whether they will have sufficient funds to handle an unforeseen financial crisis or long-term care expenses.

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Approaches to Saving for Retirement When Starting Later in Life

After Jada and her spouse get aligned with the proper strategy, they can begin collaborating on a savings plan designed to meet their retirement objectives.

Given that her spouse is also around 50 years old, they might both feel reluctant about establishing separate retirement accounts, hence the hesitation could stem from this reason. spousal RRSP It could be a suitable choice since he has the potential to add to Jada’s retirement savings and also obtain a tax benefit.

It's best to begin saving for retirement at an earlier age so as to take advantage of power of compounding There's always time to begin.

For example, even if you’re starting later in life, you could still benefit from opening an RRSP and funding it to the maximum amount — especially if your employer matches your contributions. For the 2025 tax year, the maximum contribution limit For an RRSP, the amount is $32,490.

Jada’s spouse could likewise play a part in contributing to this. TFSA , which utilizes post-tax money and accumulates earnings without taxes. This implies that provided he adheres to the withdrawal guidelines, those withdrawals won't be considered taxable income. Regarding the 2025 tax year, the upper limit is contribution cap for a TFSA is $7,000.

For Jada and her spouse, engaging in those difficult discussions about finances might enable them to align their retirement objectives better—providing relief for Jada as well.

Sources

1. RBC: Money matters and emotions: Rigorous financial conditions impacting partnerships amongst Canadian pairs – RBC survey (December 12, 2024)

2. Government of Canada: MPP, DRIP, RRSP, DPSP, CPP, TFSA limits, UCCB, and PYE

3. Government of Canada: Tax-Free Savings Account (TFSA) - A Guide for Individuals

This article I'm 52 years old and manage to save at least 10% of my earnings for when I retire; however, my spouse isn’t setting aside any money and doesn't intend to start. How should I proceed? originally appeared on Money.ca

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