Liz Koh: Relief for age gap worries

By Liz Koh

There are numerous celebrity relationships with large age gaps between partners (Michael Douglas and Catherine Zeta Jones, Woody Allen and Soon-Yi Previn, Calista Flockhart and Harrison Ford) and such relationships are increasingly common throughout society.

The success of any relationship relies on good communication and negotiation of differences so the needs of both partners can be met. Financial issues because of age differences are among those that need to be resolved.

As a general rule, risk aversion increases with age. Attitudes towards risk and an investment time frame are key determinants of investment strategy, and it may be that with an age-gap couple each requires their own portfolio.

Older partners are often in a position to teach the younger ones good financial skills and habits, as well as provide financial security. The retirement of one partner can present issues. The younger partner may have to keep working to bring enough income into the household, or may feel pressured to give up work in order to spend time with the aging retiree. Relying on the younger partner's earnings can be disastrous if either partner becomes ill and needs care.

It's typical for an older partner to become concerned about the long-term future of the younger one and be reluctant to spend their retirement savings. An older partner may also worry about what will happen to their wealth in the event that the younger one enters a new relationship later in life. Where there are children from previous relationships, there can be conflict regarding the availability of inheritances, as often the surviving partner takes precedence over the children, who may be of a similar age.

None of these issues are insurmountable with the right advice, and in the end it's love which is important - not money.

Liz Koh is an authorised financial adviser. The advice given here is general and doesn't constitute specific advice to any person. A free disclosure statement can be obtained by calling 0800 273 847.

- Hamilton News

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