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How Unmarried Couples Who Live Together Can Protect Their Interests

How Unmarried Couples Who Live Together Can Protect Their Interests

It is common for many couples to live together long-term without getting married, irrespective of whether or not they are planning to do so in the future. Couples living with each other sometimes wrongly believe that they can exercise the same legal rights as spouses or civil partners when it comes to ownership of financial assets in situations of the death of one of them, or the break up of the relationship.

Regardless of the length of time of your relationship, there is little to no legal privilege in regard to your finances. In absence of the default protection that marriage gives (or common-law marriage in countries where that has some legal recognition), you will have to do something extra.

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In order to protect yourself and your interests, and also those of your partner, you need to be aware of your rights and strengthen them where possible.

Financial Protection For Couples Who Cohabitate

With respect to financial protection for unmarried couples, there are certain voluntary arrangements that can ensure rights equivalent to married couples.[1] Making a will is one of them.

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Despite recent rumors that UK intestacy laws, which set out how property is inherited on the death of a partner who has not made a will, would undergo changes, mainly as a result of the Law Commission’s recommendations that change is needed, cohabitating, unmarried couples have not been given automatic rights to inherit a partner’s property after their death.

The legal position may change in the future, but for now it is safest to make a will.

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So, to protect your interests in the case of partner’s death or break-up – couples living together should assess all parts of their life together. This includes childcare arrangements, property ownership, and financial provisions. A declaration of trust arrangement and a cohabitation agreement can help.

They are legally binding and can help in determining the ownership of assets.

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  • The declaration of trust, or deed of trust, sets out clearly all assets that each partner owns at the start of a relationship. It also entails what would happen to these assets if the couple splits up. You can treat it like a contract in which payment of bills and extra value, such as home improvement payments, can be settled or divided. It is basically linked to particular properties.
  • A cohabitation agreement is a “living together agreement” that covers daily matters like the household expenses and other relationship-specific circumstances. It can include details like childcare finances, school fees of kids, joint accounts, and paying debts. Such agreements cannot be altered without the approval of both.
  • Each partner is entitled to equal property rights in the case of a legal marriage, irrespective of who owns, maintains, or pays mortgage for it. But, for live-in couples, things are not that easy. All contributions, such as a mortgage or cash investments, should be included in the declaration of trust.
  • Also, couples buying a house together need to ensure that an appropriate legal structure is used so that ownership of the property automatically passes on to the partner after the death of the other. This is known as “joint tenancy”. Under this, both partners are property owners, such that if one dies, the survivor becomes the sole owner.
  • Under the new auto-enrollment scheme, all employees of an organization pay into the same workplace pension. Be aware that cohabitating couples cannot automatically claim any pension money due to their partner if their partner dies after or before retirement.
  • Investments and savings also need to be included in the cohabitation agreement. Otherwise, you will have no legal right to the wealth after splitting up or the death of a partner. You can agree between you that if investments and savings are jointly owned, both contributors get back the same proportions, as whatever they contributed after the relationship ends.
  • Consider this warning as well. If the couple is using a bank account for joint finances – a joint account – then this account needs to be listed in the cohabitation agreement. For jointly owned bank accounts, both partners have equal rights to the money in that account. Also consider what happens in the case of death. If the account is really just owned by one person and the other accesses it, a surviving partner will have no right to the money.
  • Child maintenance can also be claimed from an ex-partner. More extensive financial provisions can be added in the cohabitation agreement, but be aware that child arrangements are ultimately decided by a judge. Even children who are not related biologically to either or one of the partners, but who are family members, will be entitled to be maintained.

Living together and investing in property with your partner is an incredible experience, but be smart and protect yourself and your interests during a relationship.

Featured photo credit: betterment.com via betterment.com

Reference

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Last Updated on June 6, 2019

The Average Retirement Savings and How to Save Wisely

The Average Retirement Savings and How to Save Wisely

Are you on track for retirement?

If not, don’t worry, I’m not sure either. I save each month and hope for the best.

Fortunately, I’m at an age where most people don’t save so I’m ahead of the curve.

But, what if you aren’t in your 20s? What if you’re near retirement and are looking to gauge where you stand?

If so, keep reading. Here’s how to prepare for retirement and save wisely during the process.

What Does the Average American Have Saved for Retirement?

Saving for retirement is tricky.

Tell someone straight out of college to save $10k a year for retirement and it’ll be next to impossible.

Make the same request to someone decades older and they’d be more likely to be able to save this amount. But, a 20-year old college student can be “financially ahead” of someone saving more than them. Why?

Age matters in your financial journey. The younger you are, the more time you have to save and put compound interest to work. As you get older and have more saving power, you’d have less time to put compound interest to work.

Here are the average savings Americans hold by age bracket:

20’s – $16,000

During this stage, most people are paying loans and moving up the corporate ladder. Your best bet during this stage is to focus on eliminating debt and increasing your income. Don’t focus only on getting a high-paying job neither.

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Instead, focus on learning via Podcasts, reading books, and taking specialized courses. Doing this will make you more valuable and give you more career options.

30’s – $45,000

At this stage, you’ve hopefully escaped your entry-level salary and work at a career you enjoy. Your earning power has increased but you now have more obligations. For example, marriage, kids, and a mortgage.

Set a plan to pay off all your debt and focus on eliminating unnecessary expenses. Leverage financial tools like Personal Capital to ensure you’re on track for retirement.

40’s – $63,000

This is the stage where you’re at the prime of your career. Top financial institutions recommend you have at least 2 to 4 times your salary saved up. If you’re falling behind, start maxing out your 401K and Roth IRA accounts.

50’s – $115,000

During your fifties, you’re close to retirement but still, have time to save. You may be helping your kids pay college tuition and other expenses. Since you’re at the peak of your earning power, max out all your retirement accounts.

60’s – $172,000

By this point, you should have about eight times your salary saved up. If not, you’ll depend primarily on social security benefits averaging $1400 per month. Max out all your retirement options as much as possible before retiring.

Ways to Save Money on a Tight Budget

The sad reality is that most Americans aren’t saving enough for retirement.

Even high-earning power isn’t enough to secure one’s financial future. You need to have the discipline to save for retirement while time is in your favor. Don’t wait for you to have a high salary to save, start with having a small budget.

First, get a clear picture of where you stand. Write down a list of “needs” and “wants.” For example, Netflix and Amazon Prime are “wants” and a “cell-phone” is a need.

Use tools like Personal Capital to analyze your spending patterns. Personal Capital allows you to add all your financial data in one place–making it a powerful option to gauge where you stand.

Once you know all your expenses, organize them from highest to lowest expense. When you can’t cut more expenses, call your service providers to negotiate a lower price. If you’re not good at negotiating, use services like Trimm to lower your monthly expenses.

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How to Save Money Each Month

By this point, you know the average amount of money you should have saved for retirement based on your age.

But, breaking this down into monthly goals can be challenging. Here are some rule of thumbs to follow:

Aim to contribute 10%–15% of your salary each paycheck. Review your progress each week.

Why so often? The reality is that life gets in our way and you will have many financial setbacks. Your goal isn’t to be perfect but to get back on track instead.

Reviewing your finances weekly lets you know where you stand with your retirement. This doesn’t have to be a long process either. All it takes is login in Personal Capital to view your net worth and check how much you have saved for retirement.

Turn saving into a game and aim to save more each month. It will get challenging but you’ll get creative and find more ways to save.

Top Money Saving Challenge Tips

To prepare for your financial future and not be another statistic you need to be different.

How?

By adopting new habits that’ll help you become a saving machine. Here are some ways you can save more:

Automatically Contribute Towards Retirement

If you’re working for a company, you can automatically contribute towards your 401k. If you’re not currently contributing more than 10%, make this your goal. Contribute 1% more today and automatically increase this amount a year from now.

Odds are that you’re not going to be negatively affected by contributing 1% more. Many times we spend our money on things we don’t need. Contributing more towards retirement is a great way to secure your financial future.

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Use the Right Tools to Know Where You Stand

Once you’re contributing more towards your retirement accounts, gauge your progress. Make use of finance tracking apps to help you view the big picture of your retirement.

When I’d first signed up for the app Personal Capital, I didn’t know I had a negative net worth. Despite saving thousands of dollars, my debt brought my net worth to the negative. Knowing this motivated me to save more and spend less.

Now, I have a positive net worth. But, it was because I was able to view the big picture using the app. Find out what your net worth is using a finance tracking app and you may surprise yourself.

Bring in Experts to View Your Blind Spots

If you have too little or too much money saved, you should consider hiring financial experts.

Why?

You may need someone to hold you accountable to help you reach your financial goals. Or, you may need help managing your money as effective as possible.

Regardless of the reason, getting help may help improve your financial situation.

Before you hire an expert, find out which areas you need help the most. For example, if you’re constantly overspending, find a debt counselor. If you’re struggling with choosing the best investment options, hire a financial advisor.

Speed up Your Retirement Contribution

After learning how to manage your money well, the next best thing is to earn a higher income.

You’re capped at how much you can save but not much you can earn. Even if your employer isn’t giving you a promotion, you can still take charge of your financial future. How?

By starting a side-business.

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This will be something you’d work on after you’ve finished your day job. Once you start earning income from your side-business, you’ll be financially better off.

The best part is the more work you put into your side-business,[1] the more potential it has to earn more money.

So start a side-business in an area you’re familiar with. For example, if you enjoy writing, do freelance writing for small e-commerce businesses.

Once you’re earning a higher income, you can contribute more towards your retirement. Don’t wait for the right opportunity to secure your financial future, create one.

Reach Financial Freedom with Confidence

What if you were able to retire tomorrow with no problem, all because you’d have enough money saved up and little to no debt left to pay off? How would you feel?

My guess is that you’d feel happy and relieved.

Most Americans are falling behind their retirement goals for many reasons. They’re not prepared, they carry bad money-habits and are thinking short-term.

For you to retire successfully, you need to work backward and adopt better habits. Contribute more towards your 401K and focus on growing your income.

If you do, you’ll save money and pay debt faster.

Don’t beat yourself up if you’re behind your retirement goals. Take the first step today towards a brighter financial future. Isn’t retirement worth the hard work and sacrifice to be at peace?

Featured photo credit: Huy Phan via unsplash.com

Reference

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