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Are Americans better off wed?

More US adults are living together without tying the knot. What are the financial advantages and drawbacks?

By Giselle Smith Dec 16, 2011 6:38PM
Just 51% of Americans age 18 and older are married, and that's a record low, according to a new Pew Research Center report.

The decline has worsened with the economy, and more people are living together than ever before, according to The Washington Post:

Rose Kreider, a Census Bureau demographer who specializes in household statistics, noted last year that 7.5 million couples were living together without being married, a 13 percent jump in just one year. Many had a partner who had lost a job, or they could not afford to maintain two homes.

The increase in unmarried people living together is not necessarily directly related to the recession, however, as the Pew Research Center points out: "Correlation, the statisticians frequently warn, is no guarantee of causation."

Are they missing out?

So, are these unmarried couples missing out from a personal-finance point of view?


Just as married couples do, unmarried couples who live together can share expenses such as rent or mortgage payments, utilities and the cable bill. Some other possible benefits:

Post continues below.

Not being married does have financial drawbacks. Among them:
  • You're not entitled to Social Security spouse or survivor benefits.
  • If your partner dies without a will, some of the property won't automatically go to you. 
  • Even if your partner's will names you as a beneficiary, the inheritance may be subject to estate taxes that married partners do not have to pay. (The 2011 federal estate tax kicks in for estates valued at more than $5 million.)

Money management for unmarrieds

Finances are a hot topic for all couples, married or not. And, while good financial communication is important for all couples, it's twice as important for unmarried partners, who aren't automatically protected by law, writes Sierra Black at Get Rich Slowly: "For unmarried partners, it takes careful planning and legal documentation to create the kind of benefits married couples get the moment they say 'I do.'"

Some tips for managing your money when cohabiting:
  • Even if you don't share all of your finances, open a joint account for shared expenses. This can ease the hassles of writing checks to each other every time you encounter a joint expense and gives you access to shared funds in the event of an emergency.
  • Research your car insurance policies to find out if you can add a partner and, if so, which one offers the best rate.
  • If either of your employers offers health benefits for domestic partners, decide if taking advantage of that is more cost-effective than maintaining individual plans.
  • While it may sound crazy to have a prenup without nuptials, you wouldn't dream of entering any other sort of financial partnership without an agreement, would you? A cohabitation agreement can cover everything from the division of living expenses to the division of property should you separate. (You can find a free agreement form online here.)
  • Prepare a will and other important estate-planning documents.
  • Get life insurance. Financial planner Debra Neiman, co-author of "Money Without Matrimony," recommends that unmarried couples carry enough term life insurance to replace future income, such as Social Security benefits for which they don't qualify.

You don't necessarily need an attorney to create a cohabitation agreement or make a simple will, but the expense might be worth it in the long run -- especially when you compare it with the average cost of a wedding (about $27,800, according to The Knot).

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