Love can find you at any age. But when you partner up later in life, there are a lot more considerations than if you were, say, in your 20s or 30s. At this stage, you probably come to a relationship with quite a bit of life experience, especially concerning the physical, emotional and financial variety.
You might have grown children who will feel entitled to weigh in on your choice of partner. You probably have some assets—a home, retirement account, and personal savings—or the opposite, debts. You might even have a health condition or two. Incorporating a new person into your situation may take a certain amount of finesse—and, above all, a plan.
Though love might be blind, make sure you’re being clear-eyed about your new relationship.
‘I do’ or ‘I don’t’?
When things start to get serious, the issue of marriage will probably come up. Should you walk down the aisle with your beloved?
Marriage comes with a host of legal benefits, especially in the area of estate planning. Married couples have a much easier time transferring assets to each other at death, for example. If you decide to skip the vows and live together instead, don’t assume that you and your partner will have the same rights as married couples. You’ll need to take additional steps to codify your wishes.
Even with the extra hoop-jumping, a larger number of older people are choosing living together over marriage. According to the Pew Research Center, co-habitation increased by 75 percent for people aged 50 and older during the 10-year period between 2007 and 2016.
Marriage for its part doesn’t guarantee smooth sailing, either. You still need to do the proper planning to protect your assets. Consider a pre-nuptial agreement, which helps to keep some of your assets separate and spells out how you want others to be divided in the case of divorce. Otherwise, you’ll be subject to the divorce laws of your state. You may feel like a “prenup” is a romance-buster, but it can be a lifesaver if you and your soon-to-be spouse have unequal amounts of wealth, children, from a previous marriage or are expecting an inheritance.
Finances for two (or one)
By now, you’ve likely developed your own spending and saving habits and the thought of opening your books to another person might not sit well with you. Even if you don’t end up getting married to your partner, being together in a long-term relationship means at least some financial transparency and sharing will be required.
Talk early about how much of your finances you want to combine. Some couples choose to combine some aspects of their finances while keeping others separate. Some things to consider:
- Share and share alike: How will you share income, savings, and bills?
- An open book? How much of your financial decisions will be made jointly?
- All else being unequal: If there’s a disparity in resources, how much will each partner contribute to household maintenance?
- Mine, yours, ours: Consider a joint banking account for joint expenses, even if you choose to keep most other finances separate for your own use.
Consider the children
If either of you has children, you know they’re going to have some opinions about your new relationship. They may fear losing your attention to another person or they may worry—correctly or not—that you’re not making a good decision in your choice of mate. No matter how unfounded their concerns are, acknowledge their feelings.
Open communication is the key. Allow them to voice their concerns, but be equally clear about your right to pursue your own happiness. If your children and your partner do not get along, acknowledge that you may not be able to bridge the chasm without sacrificing either relationship.
If your children are still minors, be sure to set ground rules about your partner’s role in their upbringing. Will your partner attend sports games? Set curfews? Help with homework? What’s more, make sure you’re on the same page about how much of your joint finances will be used for your children’s benefit. Bear in mind that marriage could negatively impact your children’s financial aid eligibility for college. The Free Application for Federal Student Aid or FAFSA counts both spouse’s income and assets, even if the stepparent isn’t contributing to college costs.
With adult children, the financial considerations may revolve around inheritance. Your children may worry that their inheritance could be in jeopardy, especially if your partner is much younger than you. An estate planning attorney can help you create an estate plan that protects your children and also provides for your spouse.
Dealing with debt
Before you consider a stroll down the aisle, get a thorough sense of what you’re getting yourself into. Plan a financial meeting with your partner to lay out all your assets, your savings, and your liabilities. Review credit reports and scores, as well.
Even if you don’t want to be on the hook for your partner’s debt, it will still be an issue for your life as a couple. Therefore, it’s best to make a plan for debt management together.
The good news is that spouses are not responsible for the debts that each brings to the marriage. However, in community property states, of which there are nine, spouses must share any debt accumulated during the marriage. A prenup can keep your partner’s debt separate.
In sickness and hopefully in health
The high costs of health care—now estimated at an average of $11,000 a year for people 65 and older—is one reason why older couples choose to remain unmarried. Married couples are responsible for each other’s medical bills. If one of you needs to go to a nursing home, the cost could easily wipe out your savings given the average yearly tab of $100,000.
If you plan to apply for Medicaid as a married person to cover the cost of your long-term care, bear in mind that you and your spouse cannot have more than $126,420 of combined “countable assets.” If, on the other hand, you applied as a single person, you would not be subject to this “marriage” limit. For example, you, as the Medicaid applicant, could show meager income and assets (under the Medicaid limits), and your partner could have, say, a million in the bank, and you would most likely qualify for Medicaid coverage. Medicaid eligibility rules are complex, so it’s important to do your homework and consult with a specialist, especially if you are contemplating marriage.
A Social Security blanket
When you’re at or near retirement, Social Security can play a big role in your finances. Make sure you’re optimizing this government benefit. Since Social Security can be extremely complicated, it’s best to consult with a specialist to get personalized advice for your particular situation. To help prepare you, here are a few things to keep in mind.
If you’re getting Social Security based on the earnings record of a former spouse, pay special attention to this next part. Divorced spouses can collect benefits based on their ex-spouse’s record, even if the ex has remarried and even if the ex’s new spouse is collecting Social Security on the same record. You must be at least 62 and your ex is entitled to receive benefits. And if you are the ex-spouse of someone who has died, you can still collect survivor benefits if you were married at least 10 years.
But when you remarry, you lose the ability to claim Social Security on your former spouse’s record unless your current marriage ends, whether by death or divorce.
On the other hand, if you’re a widow or widower or surviving divorced spouse and you remarry after age 60, then you are still entitled to benefits based on your former spouse’s earnings record.
Love, sweet love
As you can see, there’s a lot to consider when it comes to pairing up later in life. Dealing with as many issues as you can upfront will go a long way in helping you enjoy your relationship without worrying whether you’ve protected yourself and your beloved.