‘We keep our finances separate’: My boyfriend is in his 50s with no retirement savings — how worried should I be?
My partner and I have been together for seven years.
We are not married. We are both in our early 50s, and we both have adult children. We are both debt-free. He’s a contractor/carpenter and has money in a high-interest savings account from occasional cash-paying jobs, but he’s never put together any retirement strategy, so he has no investments. I’ve been putting the maximum into my employer retirement plans and a Roth for almost 20 years.
He built our home over the last three years. We are both on the title and carry no mortgage. We are in the process of buying another property that he will remodel and that we plan to use as a rental. We keep our finances separate but work very well together out of a joint account for the purpose of our current home and the project house we plan to buy. Is this a good idea? What retirement investment products are available to him?
Californian Girlfriend
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Let’s start with the good news: You are both debt-free, so while your partner has not had a job with a 401(k) or managed to set up an IRA or invest money in the stock market or other investment vehicles, he has stayed out of debt. That says a lot, particularly if he was a modest earner during those years, but it does not obscure the fact that he may have been living one day at a time and perhaps did not have the money or knowledge to save for retirement. That said, being debt-free is not a substitute for retirement planning.
The other positive part of this story: You both have money to invest in property, or at least the wherewithal to take out loans collectively, so I assume his credit rating is relatively good. He’s a contractor, and your homes are valuable assets — you may wish to tap the equity in these homes if you split up or you decide to downsize, or if one of you outlives the other and needs assisted living or long-term care. Real estate is also illiquid, requires upkeep, so you need a balanced, diversified retirement plan.
You say you keep your finances separate, apart from a joint bank account and, I presume, your current and future properties. There’s no shame in his game. Just because he did not put money aside for retirement does not mean he’s financially feckless. It probably means he either believed he didn’t have enough or was living paycheck to paycheck. These properties are a good start for him, and probably a good investment for you too. Separate finances with a shared account for joint assets is reasonable, but it’s also important to align your goals.
Now is the time to put everything down in writing, if you have not done so already. This will raise a lot of pertinent questions about your business arrangements. What kind of co-ownership do you have in these properties? Are you tenants in common, where one party can leave their share to a third party? Or tenants in common with the right of survivorship, where you both own a 100% share? How is his time and labor accounted for? How will you split rental income? What happens if one partner wants out and/or cannot contribute financially?
Other questions: What happens if you split up? Or if one of you dies? What if one of you needs money or simply changes their mind about these properties? What if one party fails to pay the property taxes or doesn’t have enough money for the upkeep? What if the bottom falls out of the real-estate market? You need a legal document that accounts for all kinds of outcomes. It’s for your security and for his. It will give you both peace of mind to know your investments are safe.
I strongly recommend a cohabitation and property agreement. Laws regarding cohabiting unmarried partners and co-ownership vary by state. California law, for example, offers no automatic protection for unmarried couples, and it’s a myth that if you live together for seven years, you automatically have common-law rights, says Bay Legal, which has offices in Northern California. “To protect your assets, a cohabitation agreement in California is essential,” the law firm says.
“This legal document acts as a cohabitation property agreement and clarifies finances to avoid lawsuits over issues like California cohabitation law alimony,” the law firm adds. “While a cohabitation agreement California template might seem easy, a custom plan is safer. The answer to ‘does a cohabitation agreement work?’ is a firm yes — when it’s drafted correctly to meet all legal cohabitation requirements.”
Some worst-case scenarios: California law has a “shocking twist” that can make things even more complicated, Bay Legal says. “It’s a legal claim known as a ‘Marvin Action.’ This concept comes from a famous 1976 California Supreme Court case, Marvin v. Marvin, which ruled that unmarried partners could sue each other to enforce alleged promises or agreements made during their nonmarital relationship.” Bottom line: You need to know the law in your state.
It’s not too late for your boyfriend to start saving for retirement, and now that he is in his 50s, he can even make catch-up contributions. In addition to high-yield savings accounts and CDs, he could look into a solo 401(k), SEP IRA, Simple IRA, and even traditional or Roth IRAs. “Your 50s are a turning point. There may be a light at the end of the tunnel for big expenses like tuition and mortgages and your earning power may be peaking,” Fidelity says. “Retirement could last as long as your career did.”
Now is the time for him to move beyond holding large amounts of cash and begin investing in a diversified low-cost index fund or exchange-traded fund. Regular contributions over the next 15 years can make all the difference to his retirement. But this should be part of a broader conversation about your respective readiness to retire, and how that could impact your expectations about the kind of lifestyle you want in your 60s and beyond.
For an unmarried man with no employer, health insurance will be a big consideration and expense, especially as he gets older and the risk of health events increases. “Health care is one of the biggest variables in retirement — and in your 50s, it’s time to get proactive,” Fidelity adds. In fact, the asset-management firm estimates that a 65-year-old retiring in 2025 will need $172,500 for medical expenses throughout retirement, even with Medicare.
We are entering an uncertain time for healthcare premiums and deductibles for self-employed individuals. Following the expiration of tax credits at the end of 2025, premiums for the Affordable Care Act have more than doubled to roughly $1,900 a year per subsidized enrollee, according to the health-research organization KFF. People earning more than 400% above the federal poverty level have lost their eligibility for tax credits.
You need to look out for each other, and protect your own interests too.
Previous columns by Quentin Fottrell:
‘Am I simply the unloved son?’ My mother ghosted me after my father died. Is she stealing his money?
‘We all have economic jitters’: After the Fed cut rates, should my son buy a $600K house?