Do Unmarried Couples Need Retirement Planning?

According to the most recent U.S. Census (2013), there are over 7 million unmarried-partner households in the country (over 570,000 of which are same-sex households).

Despite this fact, most retirement planning advice is geared towards older adults who are married, single or widowed.

Do Unmarried Couples Need Retirement Planning?

But what about those of us who are with partners, but choose not to marry? What are our retirement planning rules?

In short, they’re a bit different.

If you’re over the age of 50 and live in an unmarried-partner household, carefully consider your retirement plan. Like most things, the devil is in the details.

Home Ownership and Property Titles

While you may be on top of your joint budgeting and financial responsibilities, home ownership is an area in which older, unmarried couples remain vulnerable.

If you’re an unmarried partner and share a home, ensure your house is properly titled. If only one name appears on the home title, the other partner (whose name is not on title) could be legally evicted if their partner passes away. Furthermore, if adult children are in the picture, they (not you) may be legally entitled to inherit the property.

For protection, if you’ve both contributed equally to the home purchase, put the title in both of your names, and add a joint tenancy with right of survivorship.

Have a house that was purchased by just one partner? In that case, the homeowner should name their partner in their will, to ensure the non-owner can keep the home after the owner’s death.

Retirement Accounts and Social Security

Retirement accounts such as 401(k)s, IRAs and pension plans also require owners to explicitly name a beneficiary in the event of their death.

If a beneficiary isn’t named, the account is passed on to the next of kin. For married couples, this isn’t a big deal: the spouse is the next of kin. However, that’s not the case for unmarried couples, and the lack of a named beneficiary can present problems.

Social Security is another consideration you should plan for in retirement. Unmarried couples are not eligible for Social Security spousal benefits, or Social Security widow benefits. This is an issue for couples with disparate earnings records. If the higher-earning partner passes away first, the lower-earning partner will have to make do with their own Social Security benefits.

Where possible, have the higher-earning partner save enough for retirement for the both of you (independent of Social Security), and make sure the beneficiary information is correct.

Estate Planning and Power of Attorney

We tend to think of estate planning as a way of deciding what happens to property after our death. However, another important aspect of estate planning is deciding how financial, medical and legal decisions will be made in the event you become incapacitated.

These advance care directives are vital for everyone. However, for unmarried couples, it’s even more important to put your wishes in writing.

If you and your partner have not specifically appointed each other as durable power of attorney (also known as an enduring power of attorney), or have not written advance care directives, a family member or state-appointed individual may end up making important life decisions for you, or instead of you.

Finally, plan ahead for estate taxes. For married couples, if one person dies, marital wealth is transferred tax free to the widow or widower. Unmarried couples do not have this benefit, and must plan ahead for how the surviving partner will pay those taxes.

About the writer

Emily Guy Birken

Emily Guy Birken is a financial blogger and the author of three books: The Five Years Before You Retire, Choose Your Retirement, and Making Social Security Work For You. Based in Milwaukee, Wisconsin, she specializes in writing about retirement and behavioral economics.

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