In a relationship but not married? Allworth co-founder Scott Hanson explores the financial challenges and must-dos for couples who decide to cohabitate later in life.
Since 2010, the number of cohabitating adults over the age of 50 grew by more than 75%. 1
Save money. Fewer potential legal entanglements. Living longer and enjoying better health.
In an era when more folks over 50 are choosing to live together, it’s imperative that you make informed financial decisions.
Speaking of the unique legal and fiscal challenges of cohabitation, we had an interesting duo come into one of our offices last week. Both good savers, and each having been married more than once previously, their situation was a literal checklist for the complexities of newer partnerships comprised of people with long, disparate financial histories.
Armed with some great questions, what they wanted most was mutual financial transparency and fairness.
Via extensive Q&A, we set about laying the groundwork to build a plan that protects what they’ve independently built while combining certain aspects of their lives in accordance with their wishes as a couple.
This made me think about the importance of establishing healthy financial habits for later-in-life cohabitations.
Here are 4 basics that every couple should explore.
Develop and discuss financial goals you’d like to achieve together
When I first meet with, older (over 50), newer couples, I ask them what their combined financial goals are, and they often uncertainly glance at one another.
Oh, they’ve talked about their excitement for the future, but they haven’t always really discussed it.
Because if there is one thing that I recommend couples do anytime they meet with an advisor, especially if it’s the first time, make sure the two of you have had some heart-to-heart discussions about what your future goals are.
Now, these goals are yours and yours alone, so they can be ambitious, such as buying a home together in the south of France, or they can be simple, such as sharing life and travel expenses evenly.
You may need to re-think your retirement roadmap
Long before you made the decision to move in together, you have both been thinking about, and preparing for, retirement.
And the bulk of that preparation may have been solo.
Ask yourself, “How is cohabitating going to change my plans for the future?”
For instance, now that you are partnered again, do you want to stop working sooner? And, if so, how will that impact your investments, your Social Security filing strategy, and your future income sources?
Will you eventually get married and update your estate plan?
I’m a big advocate of following your heart … to a point.
Not to steal your thunder, but marriage between people over 50 is typically a complex issue, not only for the two of you, but for your families and your estates, as well.
For example, in many states, spouses are typically held responsible for all medical bills. And, if marriage is in the cards, have you considered a prenuptial agreement?
While getting married can financially benefit some folks, it’s highly, and even legally, problematic for others.
This is where intention and honesty and a thorough financial evaluation are essential. And even though your relationship is between you and your partner, I encourage couples to be up front with family about their plans for the estate should something happen to one of you.
Consider a cohabitation agreement
Remember, no matter how close you’ve become, and even if your relatives consider your partner to be family, couples that live together do not enjoy the same individual protections as couples who are married.
A legally enforceable document, a cohabitation agreement not only provides protection for couples who have decided to live together, but they can be a terrific way to protect you and your assets from numerous common issues that may arise.
To be sure, these agreements aren’t merely about protecting the assets of the more affluent partner. A cohabitation agreement can also make certain that promises are kept regarding shared property and even communal debt.
Due to advancements in medicine, as well as the evolving way that Boomers and Gen Xers view their place in the world, people are living longer and finding love later than before.
While that’s all potentially great news, just make sure you communicate openly with your partner, share your vision, and protect your hard work and families from heartache.