Allworth Advice | We're not married. What's that mean for our money?
Every week, Allworth Financial’s Amy Wagner and Steve Hruby, CFP®, answer your questions. If you, a friend, or someone in your family has a money issue or problem, feel free to send those questions to yourmoney@enquirer.com.
J.K. and L.D. in Loveland: We’re both in our 60s and previously divorced. We just started living together, and while we’re in a committed relationship, we probably won’t get married (been there, done that!). Is there anything we should know or do from a financial and legal standpoint since we’re not legally married?
Answer: Right off the bat, we need to remind you that we are not lawyers so we can’t provide legal advice. But we do have a few general things you should keep in mind as a ‘co-habitating’ couple.
Something that can often get overlooked when relationship statuses change are beneficiaries on financial accounts. So, update these ASAP. Beneficiaries supersede anything stated in a will – so they’re extremely important to keep up to date. (You likely don’t want your ex-spouses receiving the inheritance, right? And yes, we’ve seen this happen.) Similarly, you’ll also want to create durable powers of attorney for health and finances as well. This will give each of you a legal say if the other becomes unable to speak for themselves or make decisions.
Also keep in mind that when it comes to Social Security, co-habitating couples like yourselves will not be able to claim benefits based on the other partner’s work record like married couples can do. And if you happen to break-up, claiming the ex-spousal benefit off your respective work records is off the table as well since, again, you’re not technically spouses in the eyes of the government.
We should also note that inheriting an IRA is a bit more complicated for non-spouses since all funds need to be drawn down within 10 years. This could have implications across other financial aspects of the surviving partner’s life, such as taxes. Additionally, while you are allowed to set-up a joint bank account together, putting in too much over a certain threshold could mean you have to file a gift tax return.
If you own a home (or plan on buying one), you’ll also have to think about how the house is titled. Who’s on the mortgage? How will the expenses be split? You could consider creating a co-habitation agreement to help with these kinds of questions, among others. (But again, please consult a lawyer.)
With all that in mind, here’s the Allworth Advice: One of the keys to any relationship is being open and honest about money and financial goals. And this doesn’t change depending on whether or not you have a marriage certificate. So be sure to continuously have these kinds of heart-to-heart talks.
Judy in Cleves: I started claiming Social Security at 62 but now want to stop. Can I do that?
Answer: There are two courses of action here: You can suspend your benefit, or you can withdraw your benefit. Withdrawing your benefit is basically like asking for a mulligan – it’s a one-time action you can take if it’s been less than 12 months since you were first entitled to benefits. You’ll have to repay any benefits you have already received.
Meanwhile, suspending your benefit is more of a pause. In this case, you can actually earn delayed retirement credits for each month your benefit is suspended (which will boost your benefit down the road). But you have to be at least Full Retirement Age (and younger than 70) to do this.
The Allworth Advice is that Social Security is one of the more complex parts of retirement planning. Just one decision could have reverberating effects for years to come. A fiduciary financial advisor can help you determine which of these options is truly your best course of action.
Responses are for informational purposes only and individuals should consider whether any general recommendation in these responses are suitable for their particular circumstances based on investment objectives, financial situation and needs. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing, including a tax advisor and/or attorney. Retirement planning services offered through Allworth Financial a SEC Registered Investment Advisor. Securities offered through AW Securities, a Registered Broker/Dealer, member FINRA/SIPC. Visit allworthfinancial.com or call (513) 469-7500.
This article originally appeared on Cincinnati Enquirer: Allworth Advice | We're not married. What's that mean for our money?
