Retirement Planning for Couples Living Abroad

Retirement planning for couples involves all the complexity of individual planning, plus a set of additional considerations that arise specifically from the joint nature of the endeavour. Coordinating pension access ages, planning for the survivor when one partner dies, making joint decisions about residency country, and ensuring estate documents work together across borders — these require deliberate planning that addresses the couple as a unit and each partner individually. For internationally mobile couples, the complexity is amplified by different nationalities, different pension histories, and succession laws that may apply differently to each partner.

Coordinating Pension Ages

Where partners are different ages — common in many couples — their pension access ages will differ, creating periods where one partner can draw from pension savings and the other cannot. This asymmetry requires careful planning:

Income gap management. If the older partner retires first, the household income may need to be funded from non-pension sources (investment portfolio, rental income, part-time work) until the younger partner's pension becomes accessible. A clear projection of income across both partners' retirement timelines — not just a single assumed retirement date — is essential.

Sequential tax efficiency. Drawing income from the older partner's pension first, while the younger partner's pension continues to grow tax-deferred, maximises long-term portfolio value. However, the younger partner's pension contributions may also be maximised during the period when they are still working, taking advantage of the annual allowance and employer contributions.

State Pension age difference. If partners are different ages, their State Pension ages may also differ. The UK State Pension is currently payable at 66, rising to 67 between 2026 and 2028 — but your specific age determines when your individual pension begins. A four-year age difference creates a four-year gap in State Pension receipt within the household.

Joint Life vs Individual Planning

A common and understandable shortcut in couple retirement planning is to treat the household as a single unit and project income and expenditure jointly. This is a useful starting point, but it masks vulnerability:

• What happens when one partner dies and income falls by 30-50%?
• What if one partner loses capacity and cannot manage their affairs?
• If the couple separates, are both partners individually solvent?

Best practice is to plan at two levels: a joint household plan covering income needs and expenditure, and individual plans covering each partner's assets, pension entitlements, estate documents, and capacity planning. Both levels should be updated at the same time in annual reviews.

Survivor Planning: When One Partner Dies

The death of one partner typically triggers a significant income reduction:

Pension survivor income. A defined benefit pension (final salary scheme) typically pays a survivor's pension to a spouse or civil partner — usually 50-67% of the member's pension. But this benefit is not automatic in all schemes; check the specific scheme rules and ensure the survivor is the nominated beneficiary.

A defined contribution pension in drawdown is more complex. On death before age 75, undrawn funds can typically be passed to a nominated beneficiary free of income tax (as a lump sum or inherited drawdown). After age 75, inherited funds are taxed as income when the beneficiary draws them. Nomination of beneficiaries should be reviewed regularly; it is the nomination on file with the pension provider that determines who receives the death benefit, not the terms of a will.

Annuity survivor income. A joint life annuity continues to pay to the survivor at a reduced rate. A single life annuity ceases on the death of the named annuitant — leaving the survivor with no income from that source. For couples relying heavily on annuity income, the choice between joint and single life annuity is a critical decision that should account for each partner's individual income sources and what each could sustain independently.

Income replacement planning. A practical approach to survivor planning is to model the household income in two scenarios: (a) if the older/higher-income partner dies first, and (b) if the younger/lower-income partner dies first. If the survivor's income in either scenario falls below a sustainable level, additional provision — a joint life annuity, a life insurance policy, or a larger individual investment portfolio for the more financially dependent partner — is needed.

Life insurance in retirement. Life insurance is often associated with protecting dependants during the accumulation years. In retirement, it may still be relevant where there is a meaningful income gap if one partner dies — particularly if the surviving partner has few independent income sources.

Joint Decisions on Residence Country

Choosing a country of retirement is a major joint life decision, and one where the tax implications may differ between partners:

Different nationalities. A British/Irish couple may both retire to Cyprus with identical lifestyle but face different tax positions — one may be treated differently under the applicable treaty, or one may have domicile considerations the other does not.

Different residence histories. From 6 April 2025, UK Inheritance Tax applies to the worldwide estate of a "long-term UK resident" — broadly, someone UK-resident in at least 10 of the previous 20 tax years — rather than being determined by domicile. If one partner is a long-term UK resident and the other is not, their IHT exposures are different. Assets held jointly may be taxed differently depending on who is the deceased and who is the survivor.

Spouse exemption and its limits. The UK IHT spouse exemption allows assets to pass between married couples or civil partners free of IHT on the first death. Under the residence-based regime introduced on 6 April 2025, the unlimited exemption applies where the surviving spouse is a long-term UK resident; where the survivor is not within the UK IHT net, the exempt amount that can pass free of IHT is restricted (the survivor can elect to be treated as within the UK IHT net to obtain the full exemption, at the cost of bringing their worldwide estate into scope). This is significant for internationally mobile couples whose partners have different residence histories — take specialist advice on the current rules.

Power of Attorney: Individual Requirements

Many couples assume that if one partner loses capacity, the other can automatically manage their financial affairs. This is not the case. In the UK, being married or in a civil partnership does not grant the right to manage a partner's finances. Only a valid Lasting Power of Attorney, registered with the Office of the Public Guardian before the need arises, confers that right.

Each partner needs:

• A UK Lasting Power of Attorney for Property and Financial Affairs
• A UK Lasting Power of Attorney for Health and Welfare
• Equivalent documents in any country where they hold significant assets or bank accounts

If one partner loses capacity without a registered LPA in place, the other partner may need to apply for deputyship through the Court of Protection — a lengthy, expensive, and distressing process that can freeze access to assets for months.

Joint Wills vs Separate Wills

A common misconception is that couples can or should have a single joint will. Under English law, a valid will is an individual document. Partners should each have their own will, drafted in parallel to ensure they are consistent and do not create conflicts.

For internationally mobile couples, each partner may need multiple wills: one for UK assets, one for assets in the country of residence, and potentially one for other jurisdictions where significant assets are held. Each will should be drafted by a local lawyer familiar with local succession law, with all wills cross-referenced so they do not inadvertently revoke each other.

Mirror wills. A common approach for couples is mirror wills — two wills with identical, symmetrical terms (each leaving everything to the other, then to the same beneficiaries). Mirror wills work well when the couple's asset positions are symmetrical, but they can create problems if one partner subsequently changes their will unilaterally, or if assets are held differently between partners.

Treatment of Jointly Held Property

Property held in joint names is treated differently across jurisdictions:

UK joint tenancy. UK residential property held as joint tenants passes automatically to the surviving joint tenant on death — it does not pass through the will. This is efficient for surviving spouse succession but may not be appropriate for blended families where both partners have children from previous relationships.

UK tenants in common. Property held as tenants in common means each partner owns a defined share (not necessarily 50%), which can be left through the will to any beneficiary. This provides more flexibility but requires the will to deal with the property share explicitly.

Overseas property. Joint ownership rules vary significantly by country. In some jurisdictions, jointly owned property passes automatically to the survivor; in others, the deceased's share forms part of their estate and must pass through the succession process. Local legal advice is essential.

PACS, Marriage, and International Recognition

Married couples generally have the strongest succession and legal protections in most jurisdictions. However, civil partnerships and civil union arrangements (such as the French PACS) are recognised differently in different countries. For couples in a PACS or civil union, it is worth checking whether the arrangement is recognised in the country of retirement for succession, tax, and healthcare decision-making purposes.

Same-sex couples married in the UK should check the recognition of their marriage in their country of retirement, particularly for succession, healthcare, and pension survivor benefit purposes.

How Global Investments Can Help

Retirement planning for couples requires coordinated planning that addresses both the household and each individual. Global Investments has worked with internationally mobile couples for over 32 years, helping them structure retirement income, survivor plans, estate documents, and residency decisions in a way that protects both partners' financial security.

We work alongside local legal advisers in key jurisdictions — Cyprus, Spain, Greece, and beyond — to ensure that wills, powers of attorney, and trust structures are in place and aligned for both partners.

To discuss retirement planning for you and your partner, please contact us.

This guide is for educational purposes only and does not constitute personalised financial, legal, or tax advice. Pension rules, succession laws, and IHT provisions vary by jurisdiction and change over time. Always seek independent professional advice in the relevant jurisdictions.