Shacking up before marriage could be making you poorer

“We have to embrace the fact that we are not going back to the days when everyone married at a young age and stayed married.”

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Couples often move in together as the step before getting married – or an alternative to marriage. Today, two-thirds of unmarried couples choose this option. Some do it to save money, on rent, utilities, and other shared household expenses. However, while living together might save couples money in the short term, it hurts them financially in the long term, according to research from Iowa State and Kansas State universities.

The study found that people who cohabited had less wealth in comparison to couples who had never lived together before marriage. This gap in wealth became more significant for people who had cohabited multiple times.


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“We have to embrace the fact that we are not going back to the days when everyone married at a young age and stayed married,” said lead researcher Cassandra Dorius, and assistant professor of human development and family studies at Iowa State University, in a statement. “We are in a new world and we need to think about what that means in practical ways.”

Survey respondents that were currently single, but had previously cohabited were calculated to have lost an average of $39,945 of their net worth. Single people who had cohabited more than once were calculated to have lost $44,219 of their net worth. Meanwhile, people cohabiting for the first time lost $26,927 of their net worth, and people currently cohabiting for the second time lost $33,809.

“Cohabiting relationships tend to be more short-term and unstable, and you keep starting over every time,” said Dorius. “That is difficult for wealth generation.”

The data does not explain why the wealth gap exists, but researchers say the instability of cohabitation and the lack of legal protections contribute. If unmarried, cohabiting couples split up, their assets are more likely to get divided up unequally – unlike in divorce, which has legal protections. Also, unmarried couples are unlikely to sink their money into more stable financial options like retirement funds or a house, and are more likely to spend their money on things that rapidly depreciate, like furniture or cars.

To protect each party’s assets should they split up, Dorius recommends a cohabitation agreement, similar to a prenuptial agreement.

“There is no reason why we shouldn’t be forward-thinking, acknowledge how cohabitation is affecting wealth, and start dealing with it,” said Dorius.

The study was published in the Journal of Financial Planning.


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Sheila McClear|is a reporter for Ladders and can be reached at smcclear@theladders.com.