More than seven-and-a-half million couples live together without tying the knot—and that number is growing. It may appear to be a simple arrangement, but can be full of complexities when it comes to money and financial planning, especially in retirement.
Tom Blake, 71, and Greta Cohn, 69, know all about it. They've been together for 13 years.
Blake moved into Cohn's house after three years of dating. He admits, when it came to money, building trust took time. Both of them had financial interests to protect.
"I was much much too cautious", says Blake, who at first tried to make sure they divided every expense 50-50. "You know, let's say we were to split $42.24. I'd go it's $21 and change. And it was kind of ridiculous."
They now say money is not an issue. Each takes care of their personal debt and expenses and they use a joint credit card for shared purchases.
While the number of couples living together has doubled over the last decade, there are very few legal and financial protections for them. So financial advisers recommend that unmarried partners build their own safety nets.
First, be specific. Figure out your expenses. Determine who will pay what. What's yours, mine and ours? Save even more money. Non-spouse pension rollovers and insurance benefits may not be available. Maintain proper titling of assets. And don't become completely financially dependent on your partner.
"Unmarried couples have to plan individually together, so it as if they are individually retiring and then sharing the expenses", says financial adviser Jeffrey Christakos, a CPA and certified financial planner with Westfield Wealth Management in New Jersey.
Christakos also tells his clients to put everything in writing and have a will and advance medical directives in place.
"Often times unmarried couples have problems accessing hospitals where their significant other is in a critical medical situation. So they have to have things in writing so they can prove to the hospital that they would be the person that would make these critical decisions," Christakos says.
Blake and Cohn say their formula for success is honesty and communication. For them, financial independence just makes sharing life together even more enjoyable.