Part Three

In Part One we discussed how to prepare.  In Part Two we looked at financial decisions for setting up your temporary household, avoiding the headaches of over-complication, and how not to entangle your finances too early.  

In this part we will talk more deeply about Permanence and why marriage (financially, if no other reason) may be your best permanent plan.


The end.  As uncomfortable as it sounds, you should also have a talk with your potential live-in partner about “what to do if the relationship ends, including who would stay in the apartment, Whitman said: ‘It’s always better to have a plan’.”

“Some couples who are first moving in together prepare a cohabitation agreement, in which they outline who gets what, such as the place itself and any furniture, if they go their own ways, experts said.”

Not the end.  One huge financial issue for cohabitating couples is planning for their future TOGETHER.  They rarely save money TOGETHER for house, family, or retirement.  The entire shacking up financial picture lends itself to short-term thinking.  There is a bias toward non-permanentness.  It is more like a “business” partnership than a “family.”  They don’t take the same last name, they don’t share a common bank account, they don’t even have children with a shared last name.  It is a logistical mess.  

It gets far worse when we are talking end of life issues for a partner.  A non-spouse does not  automatically inherit the house*, car, Social Security, pension, or investments.  You don’t even get the tax benefits that a spouse would have if you are a named inheritor of his/her IRAs.  As much as I hate being the bearer of bad news:  Cohabitation is one of the leading causes of prolonged poverty.  Not having long-term relational goals can lead to years wasted due to poor financial planning.  (* I once talked with a woman whose partner died.  She kept making payments on the house, paid the taxes, insurance, AND did some expensive upgrades.  When she went to sell the place she found out that her name wasn’t on the deed.  It wasn’t hers.  Her partner had no will.  The state got it all.)  


Marriage? (or, at least, permanence).  Yessir!  This should be the goal of long-term cohabitation.  Plan this before moving in.  The question should be:  “At what POINT do we become engaged, become permanent partners, OR go our own ways?”  I know people who have wasted 5, 6, or 10 years on “junk” partners they could not see themselves staying with for the rest of their lives.  Should you be “permanent” before having a family? (I say emphatically “Yes.”)  You need BOTH “exit” AND “permanence” plans.  

18-24 Months.  My opinion: if the couple has not made a decision regarding permanence of the relationship around 1 ½ to 2 years in, they are doing a grave disservice to themselves.  You should KNOW with little doubt at that juncture whether it is worth making the relationship a permanent one.  If you don’t believe he or she is “the one,” or if it is “iffy” then it is in your best interest to dissolve the arrangement and move on.  Why waste more time?  Problems have not resolved, irritations have increased, and the partner won’t decide FOR or AGAINST??  GET OUT and move on!!!  

Do NOT wait until this point to go for counseling.  Counseling is a decision delay tactic.  If your partner is otherwise worth your investment, except for … (you name the issue) get counseling before this point.  At two years either make it permanent or dissolve it.

In working through these issues, the more you identify the decision points the less insecurity you will experience.  You both know where the goalposts are.  If it is clear that one partner is no longer working to achieve the goal it will also be very clear it is time to end it.  Time does not create good relationships, shared goals do.


This is the part which is least planned through for many who have a living arrangement.  Let me briefly explain how a $100 investment at this point will literally save you $1,000s every year.  A marriage at the county clerk’s office will likely cost less than $100.  There are multiple ways that simple piece of paper (and that permanent commitment) will save you big bucks:

Legal Rights.  Once you have decided to make your relationship “permanent” you should go to a lawyer.  Your money and investments will be more and more co-mingled from this point.  House, car, kids, IRAs, etc.  If you decide to have children you need life insurance.  If you have health issues at some point you will need a medical POA.  If you become incapacitated, even for a month, you will need a durable POA.  You should have a Will at the very least.

Being married makes every legal step easier and less expensive.  An entire legal package can cost a bundle if married.  Two packages for an unmarried couple, even if done by the same law firm will cost more.  Don’t think you can create these documents from some cheap online source.  Those websites are fine for simple documents, like Wills and Living Wills, but not POAs or Trusts, where one wrong word can make them ineffective or illegal in your state.
Who inherits his BMW or her truck?  Without a Will or Trust, the state decides.  The court could decide that your cohabitating partner’s vehicle belongs to her cousin Billy Bob, not you (even though you paid for it).

Last, having a marriage license, in itself, makes you the POA for your partner and (although it is not automatic or without trouble) makes you the inheritor of the kids and home and investments.  Also, knowing exactly how to title the house and car so all your rights are kept is important.

Life Insurance.  Permanence means you want to protect each other (and your family) financially.  You only need life insurance when the money you earn is significant to others in your family.  If you have a house with a mortgage, car payments, and children then life insurance policies begin to make a heap of good sense.  Did you know that life insurance policy premiums can be lower for married couples?

Mortgage.  Many married couples experience the benefit of a lower interest rate on their house, plus they often find themselves being granted higher loan amounts than they would as cohabiting co-owners.

Taxes.  Co-habiting couples pay higher taxes on average than married partners.  This is not true in every case.  But when one partner earns far more than the other, it is almost always so.  Who gets to count the children as dependents?  Also, investments are difficult to divide for tax purposes.  Two tax forms means two tax preparation payments, not one.  

Auto Insurance.  Multiple vehicles (plus, homeowners insurance) on a policy receives a premium discount.  If each of you has a policy separate from the other because you are not married you could be losing hundreds every year.

Retirement.  Married, the annual income limitations for IRA contributions are based on joint income, allowing for higher savings.  Pensions (sometimes) can be inherited and sometimes you can receive spousal Social Security benefits (even if you divorced the creep 21 years ago).  If the other person passed away without a Will or Trust you likely are still the beneficiary.

Health Insurance.  Healthcare insurance premiums are cheaper for couples (per person) than individually.  You also can choose between employer plans for the best one.

Summary.  Financially, marriage is the big winner for most couples.  Add up all the financial advantages of marriage over cohabitation in your case.  Would you want to live with this person for the rest of your life OR live with this person for the rest of your life, save an extra $1,000 every year, and have legal security of house and all assets?  One is OK, the other is far better (and it only costs $100).  It is really a financial “no brainer.”

REMINDER:  Check back next week when we discuss CO-BUYING.

[PLEASE NOTE that Don is always open to discussing the thoughts and opinions he shares here and welcomes comments as shared in the comment section. He doesn’t use other social media platforms and won’t see whatever you’d like to share with him if you post it elsewhere.
ALSO, Don is always open to offer his thoughts on various topics. If you have a specific request, you can let him know in a comment; he reads – and replies to – them all. ~ Sherry]

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2 thoughts on “CO-HABITATION:  SO, YOU ARE GOING TO MOVE IN? Part Three

  1. Gotta tell the truth, I’ve seen people give more thought to their next tattoo than to deciding to move in together. Backward! Should talk about stuff:
    1. How tidy is good enough.
    2. Who washes the dishes.
    3. How many cats is too many (seriously!).
    4. What to do about parents and holidays.
    5. Spirituality (and how many incense sticks is too many).
    6. Food (what’s Vegan?)
    and more.

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