The Office for National Statistics (ONS) defines a blended family as a step-family that contains a couple and at least two children. Research reported in the IFA found that around 2.2 million households in the UK are now made up of such families.
While this rise reflects a more open and modern society, it also brings added complexity to financial planning, particularly when it comes to retirement.
Balancing the needs of your current partner and, if you have them, your collective dependents, while ensuring your long-term financial goals remain on track, requires careful thought and a clear strategy.
Read on to find out how to plan for retirement when you have a blended family with stepchildren.
Clarify your household dynamics and dependents
Before you dive into the numbers, it’s a good idea to consider how your blended family is structured and the dynamics it entails.
It’s important to clarify who you’re supporting and what your responsibilities are, because that could influence how much income your household needs and when you’ll be able to retire.
Ask yourself the following questions:
- Who lives in your household?
- How many dependent children, stepchildren, or other family members do you and your partner have?
- How long will they remain financially dependent, and have you saved enough to help them with big expenses, such as buying a property or education fees?
- Will your children or stepchildren have their own families, and if so, how much financial support will they need / would you like to give them?
- Do you or your partner have any children or other dependents that receive support from someone else, such as an ex-partner?
All of these factors can affect your current lifestyle and how you plan for your and your family’s future, so it’s important to lay them out early to see how they fit into your overall retirement strategy.
Setting shared retirement goals and maximising your savings
Setting your retirement goals is important for any individual and couple, but especially so in retirement planning for blended families with stepchildren, where different family histories and setups can create divergent or even conflicting objectives.
For example, there’s an age gap between two partners, the older partner may be nearing retirement and have no dependents, while the younger partner could still have children in university or private education requiring funding.
In this instance, it would be important to discuss if this requires the younger partner to continue working, while also respecting the retirement plans of the older partner. Would one income be enough to sustain the household? Or would the older partner need to delay their retirement?
Having open conversations early on about what you both want can help you avoid surprises and mismanaged expectations further down the line. It also gives you time to create new retirement dreams together, which may mean you need to adapt some of your previous goals to match your new situation.
It might be a good idea for you and your partner to combine your savings and investments, to give a clear view of your collective financial standing and what you can and can’t afford together.
And you may also want to consider getting joint insurance policies, so one partner is still supported if the other is ill or passes away. There might also be benefits for getting two single policies rather than a joint one, so it’s a good idea to explore your options and consider the pros and cons of each.
A financial planner can work with you to create a joined-up plan that ensures all parties in your blended family are looked after, while also helping you to achieve your personal and collective goals. They can use cashflow modelling to map out your future financial situation and create a bespoke plan based on your current circumstances and goals.

Estate planning for blended families and cohabiting couples
Although estate planning isn’t directly linked to retirement, knowing you have enough to leave behind for your loved ones can shape when and how you choose to retire.
In the UK, married couples with direct descendants enjoy some legal and tax benefits that unmarried couples with stepchildren don’t.
For example, married couples and civil partners can leave their entire estate to each other free from Inheritance Tax (IHT), and any unused nil-rate band can be transferred to the surviving spouse. This means they could potentially pass on up to £1 million tax-free to their beneficiaries, provided those beneficiaries are direct descendants.
Unmarried couples, on the other hand, don’t get spousal exemptions. This means their IHT thresholds are considered separately, and anything they pass on to one another is still potentially liable for IHT. It’s also worth noting that stepchildren do not automatically qualify as direct descendants for IHT purposes, which can complicate planning in blended families.
Pensions can be complex as well. Many pension schemes pass death benefits to a legal spouse automatically. But for cohabiting partners, you have to formally nominate your partner, and some older schemes might still require proof of dependency or shared finances.
Furthermore, from 2027, pensions will be included in estates for IHT purposes. This change is likely to create additional complications for unmarried partners, who may lose some of the tax advantages previously associated with inheriting pension benefits.
Therefore, it’s important to keep your will, pension nominations, and any letters of wishes up to date, and to work with a solicitor and financial planner in tandem, to ensure your estate plan remains efficient and aligned with your intentions. Failing to do so could result in unintended consequences, such as an ex-partner remaining as a beneficiary, or your estate being distributed under the laws of intestacy, which may exclude stepchildren or an unmarried partner.
Key to all of this is communication. Having open, honest conversations with your partner, wider family, and a financial planner can help manage expectations, avoid misunderstandings, and ensure efficiency. By creating a clear and cohesive estate plan that reflects your wishes, you can enjoy retirement with peace of mind that your family and loved ones will be looked after once you’re gone.
Get in touch
Retirement planning in a blended family can be complex. With different backgrounds, goals, and dependents in the mix, it’s important to be aligned and build a future that works for everyone involved.
An Amber River financial planner can help you put the right structures in place for retirement planning for blended families with stepchildren, ensuring your retirement is comfortable and your legacy is protected. They’ll work with you to make sure your wishes are carried out and your lifestyle is maintained, no matter how complex your family setup may be.
To set up an initial appointment with an Amber River financial planner, call 0800 915 0000, or alternatively, use our contact form here.
Disclaimer
The information within this article was correct at the time of publishing, but laws and tax rules are subject to change. Your circumstances and where you live in the UK may also have an impact on your tax treatment.
To learn about the government’s most recently-announced changes, please read our latest budget roundup: 2024 Autumn Budget Update
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