Financial retirement planning for couples

Couples need to ensure that their financial retirement planning is carefully matched to their risk planning.

It is still a harsh reality: When it comes to pensions, women in Germany lag behind men, with regard to both later income and to actively planning for retirement. According to a study by the Institute of Economic and Social Research (WSI), men in this country have a retirement income from statutory pensions, occupational pensions, and private pension arrangements that on average is twice that of women. On the one hand, women in many case interrupt their careers to have children, or they work part-time or often in lower-paid jobs in the services sector. On the other, according to a survey conducted by the opinion research institute YouGov, only 41% of women actively plan for retirement (see figure).

How women plan for retirement

Only about 41% of all women in Germany take steps for their private retirement arrangements. Most of them rely on private pension insurance.

What private arrangements are you making for your retirement? (multiple responses possible)
  • I have private retirement arrangements (e.g. private pension insurance or life insurance)
  • I own a home and use it
  • I invest money privately (e.g. stocks or investment funds)
  • I have an investment property from which I draw rental income
  • A different method
  • Don’t know/no information provided

Retirement planning: Look at the big picture.

Every couple should develop a joint retirement planning strategy. First step: determining the joint pension shortfall. What are the couple’s old-age requirements? What will they want in retirement? What retirement income or property do they already have? Then, each partner can close the joint shortfall depending on his or her financial abilities. Here, too, it is important to do this in a coordinated manner. For instance, risks can be spread more broadly if both partners don’t invest in the same fund or have the same pension insurance policies. And of course the couple should be sure to consider the options offered by government subsidies.

Very important: Although the individual contracts normally belong to just one partner, the couple should always look at the big picture from a joint standpoint. This becomes all the more important when one of the partners is working only part-time or, for example, is always at home because of their mutual children. “In that case, the higher-earning partner can in some cases provide help by, for instance, contributing something to the retirement arrangements of the other partner or by financing larger parts of the household expenses in order to give the other partner financial room for his or her retirement planning.” The aim should always be that each partner, at least for a certain amount of time, could also finance retirement alone with statutory and private pensions – e.g. in the event that the couple separates.

Review insurance policies

Joint financial planning also includes taking a regular look at the insurance portfolio. For instance, it is no longer necessary for both partners to have their own liability or household goods insurance. Normally, the couple can cancel the more recent of the two policies. But pay attention: If the couple combines the household goods, both should be sure also to check the total insurance amount and modify the policy accordingly.

“However, both partners should each have their own occupational disability insurance to cover their own livelihood,” recommends Michelsen.

Tip: Also in the case of a marriage where one partner is the main earner, the couple should consider insuring not only the working partner but also the one who stays at home to take care of the household.


“If that partner becomes disabled, money will also be necessary for household assistance or childcare so that the working partner won’t become overburdened,” says Michelsen.

When couples have children

Once the couple has children, the aim is to preserve the livelihood for the entire family. Particularly when a parent dies, the surviving partner and the couple’s children should have sufficient financial protection – including being able to continue to pay any property loans that may still be outstanding. The appropriate tool for this is term life insurance, which pays out a contractually specified amount to the family if the father or mother dies. According to a common rule of thumb, the amount of insurance should be three to five times the amount of the family’s gross annual income, and the policy should run until the children have completed their education.

The most sensible method is for each parent to have a policy. Unmarried couples should have “crosswise” policies. Background: Normally, the policyholder insures his or her own life, pays the corresponding premiums himself or herself, and lists his or her partner as the beneficiary. But in the case of an unmarried couple, inheritance tax is due on the policy benefits. The partners can avoid this by insuring not their own life but instead their partner’s life.

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Review strategies regularly

Whether insurance or retirement planning: “By performing regular check-ups, private finances can and should always develop in parallel to the partnership,” emphasises Michelsen. MLP advisors assist their customers by analysing the overall situation and determining individual needs.

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