The modern family comes in all shapes and sizes, and cohabitees - unmarried couples who live together – make up an increasingly large proportion of UK households. But how much do we know about the life of the average cohabitee?
Our Family Finances Report1 gives us a snapshot of the average cohabitee’s financial status, their monetary habits and even their attitudes towards marriage.
The report revealed that the typical income for cohabitees is £1,944 – 14% lower than those that are married, who have an average monthly income of £2,265. In terms of savings and investments, the average cohabitee has £2,688 – 48% lower than their married counterparts, who have £5,157 in total savings.
That said, a large contributing factor to the lower incomes, savings and investments will be the average age of cohabiting couples. A huge 84% of 18-24 year olds are made up of cohabitees, meaning cohabiting couples are likely to be earlier on in their careers than the average married couple.
Although more than half (58%) of cohabitees are homeowners, the number of married couples who own a home is also higher at 74%. Again, this is likely to be the result of the higher average age of married couples and their larger savings pot.
Worryingly, however, 10% of cohabitees admit to only being together because they can’t afford to separate – that’s the equivalent of 330,000 couples across the UK being tied into their relationship because of their finances.
One of the key triggers to taking out financial protection like a will or life insurance is buying a property, which explains why the percentage of cohabitee’s who are financially unprotected follows a similar pattern. With 64% of cohabitees going without life insurance and 74% without a will, many cohabitees leave their loved ones in a vulnerable position if something were to happen to them.
That said, this could be down to confusion around what cohabitees are entitled to. Our report found that nearly one in five cohabitees wrongly believe they’re eligible for bereavement benefit. This refers to a weekly allowance paid by the government when your husband, wife or civil partner dies. Unfortunately this isn’t the case, and may contribute to a false sense of security amongst cohabitees that choose not to take out financial protection.
Despite the aforementioned confusion regarding government allowances, over half (51%) of the cohabitees surveyed stated that they felt government benefits are weighted in favour of married couples. This isn’t enough of a reason to tie the knot for 56% though, who don’t see marriage as a necessity.
The report also revealed that living together doesn’t always mean merging finances, with one in three of those cohabiting with their partner choosing to keep their money entirely separate. Whether this is down to relationships being in their earlier stages or an active decision has been made to keep finances separate, a shift from traditional gender roles and increased job opportunities now offers couples the financial freedom to choose to take care of their finances individually.
With one in three cohabiting couples yet to name the beneficiary of their pension, it’s likely that their pension pot will end up bypassing their partner should the worst happen. While many would be happy with their hard-earned pension pot going to their nearest of kin, it’s important that couples who live together are fully aware of their rights so they can protect themselves financially.
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