Posted by Jim McClaflin, EA, NTPI Fellow

Tips for Financial Planning for the Unmarried Couples

Tips for Financial Planning for the Unmarried Couples

People in a long-term committed relationship have many similar financial concerns as couples. There is, however, the absence of the protection and some benefits married couples enjoy. This article explores tips with which you can plan your finances as a couple.


Discuss Your Finances 

As unmarried couples, both parties need to be on the same page about handling the finances –whether individually or separately. As a result, you should discuss with your partner and be on the same page on the goals, values, priorities, financial values, etc. If you are honest and open about your finances, you can avoid any issues related to finances down the line.

What about the handling of household expenses? Will it be a joint or separate responsibility? Keeping your finances separate will help keep it simple and avoid liabilities that come with different joint accounts. For example, one person can be in charge of the bills while another does the funding or agree on paying every month. However, for the sake of comfort, a lot of unmarried couples prefer to pay household expenses jointly. 

Make sure you are on the same page with the entire income and various personal expenses. Will the entire finance come together, or will you have some for private use? There can be a separate account dedicated for personal use while you pay the bills together using a checking account. 

There is also the decision on credit cards – will it be joint or separate? It is possible to open a credit card account that is joint, or you could add your heartthrob as an authorized user on an existing account. However, do not forget that a joint account puts the responsibility of the charges on both parties. 


Make Plan for Retirement

You can have joint retirement planning even as an unmarried couple. The con, however, is that it is usually harder for unmarried couples. This is because none of the parties qualify for spousal benefits from the two primary sources of retirement income – defined benefit pension plan and Social Security. You can, however, get creative on ways to make retirement palatable for you and your partner.

  • Make your partner the beneficiary of a retirement plan like 401(k), 403(b), or your other IRAs

  • Boost your savings at the moment to make up for spousal benefits that will not be available to your partner from the defined pension plan and Social Security

  • You can fund the retirement of your partner using life insurance. However, provided you can show that your interest is insurable, you can buy an individual policy with your partner as the beneficiary. 

Make sure, however, that you consider various possibilities before planning for retirement. While everything might seem blooming at the moment and you feel on top of the world, consider the possibility of your relationship ending, inadequate income during retirement, and other unforeseen circumstances. There are cases where planning for retirement together might make sense even if you foresee that you will not be separated. 


Prioritize Estate Planning 

Unmarried couples need the proper estate planning as the laws protecting married couples do not take unmarried couples under its umbrella. The absence of adequate protection could lead to the eviction of your partner from a residence you both shared, or your next of kin could get rid of the estate in whatever way pleases them. 

Also, your partner might not have a say in your medical or financial decision if you are ill or suddenly incapacitated. As a result, make sure that your estate is handled how you wish. A few things to consider are: 

  • Talk to a professional estate planning attorney to protect your assets, your family, and ultimately your partner. 

  • Have durable and reliable power of attorney for finances and healthcare. The absence of this disqualifies your partner.

  • Make a will if you intend to leave some properties to your partner. The choice makes your partner the legal heir to your estate.

  • Sign a domestic partnership agreement that is not replacing your will but a supplement to the will, supporting your partner's right to hold property as it reveals your will and intention jointly. 


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Jim McClaflin, EA, NTPI Fellow
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