Having partners at or above your skill level is important for improving in your martial arts training. At some point, however, you will probably find yourself with a shortage of skilled partners, especially if you are an instructor.
This can happen for any number of reasons: students can move away, change their work schedules, start a family, etc., and just like that, you find that you're the highest-ranked student, or sole instructor, in your gym or dojo. This doesn't have to be a bad thing. In fact, if you take advantage of it, even working exclusively with lower-ranking classmates or students can improve your skills.
I used to host a twice-a-week training session at my dojo where I invited mostly black belts from other schools (as well as a few of my advanced students) to come and run drills. It was a blast. These were tough two- to three-hour sessions where I got to work with fighters of all different sizes, speeds, and technique preferences. My sparring improved dramatically over the next few months, and I don't think I've ever been in better shape. But unfortunately, it doesn't always work out that way. And as the old saying goes, "You gotta work with what ya got." So, make it hard on yourself.
I like to set handicaps when fighting my students. Specifically, I focus on forcing myself to work on improving my weak areas. Is you right leg weaker than the left? Then only kick with the right leg when sparring your students. Not much of an inside fighter? Don't kick at all. Training with partners of lesser skill not only helps you improve your weak points but gives them an opportunity to improve as well by working on strategy. It's also great for building their confidence. It can also be a low-cost opportunity to test new techniques and combinations, which benefits you as well.
In grappling, just like sparring, there is little benefit to wrapping lower ranking classmates into pretzels over and over, for them or you. Instead, let your partner put you in a bad situation. Let them get the mount; help them sink in that choke or armbar. If you start standing, such as in judo, allow your partner to get the superior grip before attempting a throw. This way you will get comfortable working out of a weaker position and your less-experienced partner can perfect their technique (and get experience using multiple techniques, if you get out of their first one).
You might think that giving advantages like these to students who may be far beneath your skill level is much of a challenge. Trust me, you'll reconsider that sentiment when you wind up sparring a 6'5" novice with zero control over his strength after deciding to only use your weak leg, or have a 250-pound green belt lying across your diaphragm trying to get an armlock after you let them get the pin. Remember, this is exactly what you signed up for: a challenge.If you find yourself at the top of the heap without partners who are sufficiently challenging, there is no need to despair. Use it as a low-stress opportunity to improve your weaknesses and develop avenues to help your less experienced classmates and students to grow. You may even be surprised. One day they might present more of a challenge than you ever imagined!