My boyfriend is in his 50s with no retirement savings — how worried should I be?
“I have been putting the maximum amount into my employer retirement plans and Roth for almost 20 years.” (Photo subjects are models.) – Getty Images/iStockphoto
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 is a contractor/carpenter and has money in a high-interest savings account from occasional cash-paying jobs, but he has never created any retirement strategy, so he has no investments. I’ve been putting the maximum amount into my employer retirement plans and Roth for almost 20 years.
He built our house for the last three years. We are both on title deed and have no mortgage. We are in the process of purchasing another property that we will renovate and plan to use as a rental. We keep our finances separate but work very well together with a joint account for the purpose of our current home and the project home we plan to buy. Is this a good idea? What retirement investment products are offered to him/her?
You are both debt-free and own your home. That’s the good news. – MarketWatch image
Let’s start with the good news: You’re both debt-free, so even if your partner doesn’t have a job with a 401(k) or hasn’t managed to set up an IRA or put money into the stock market or other investment vehicles, he or she is out of debt. That’s saying a lot, especially if he had a modest income in those years, but it doesn’t detract from the fact that he may have been living one day at a time and perhaps didn’t have the money or knowledge to save for retirement. However, being debt-free is no substitute for retirement planning.
The other positive part of this story: You both have money to invest in property, or at least money to take out a lump sum loan, so I’m assuming his credit score is relatively good. He is a contractor and your homes are valuable assets; If you separate or decide to downsize, or if one of you lives longer than the other and needs assisted living or long-term care, you may want to tap into the equity in these homes. Real estate is also illiquid and requires maintenance, so you need a balanced, diversified retirement plan.
You say you keep your finances separate apart from a joint bank account and, I assume, current and future property. There is no shame in your game. Just because he hasn’t set aside money for retirement doesn’t mean he’s financially inept. This probably means he either believes he doesn’t have enough money or is living paycheck to paycheck. These properties are a good start for him and probably a good investment for you too. Separate financing for joint assets with a joint account is reasonable, but it’s also important to align your goals.
If you haven’t already, now is the time to get everything in writing. This will raise many questions about your business arrangements. What kind of joint ownership do you have in these properties? Are you tenants in common, where one party can leave his share to a third party? Or joint tenants with right of survivorship where you both own a 100% interest? How is your time and effort accounted for? How will you share the rental income? What happens if one partner wants to leave and/or cannot contribute financially?
Other questions: What happens if you break up? What if one of you dies? What if one of you needs money or changes your mind about these properties? What if one party cannot pay property taxes or does not have enough money for maintenance? What if the bottom of the real estate market falls out? You need a legal document that explains any consequences. This is for your and his safety. Knowing that your investments are safe will give you both peace of mind.
I highly recommend the cohabitation and ownership agreement. Laws regarding cohabitation of unmarried partners and community property vary from state to state. For example, California law offers no automatic protection for unmarried couples, and it is a myth that if you live together for seven years you automatically have common law rights. Mr LegalWith offices in Northern California. “A cohabitation agreement in California is essential to protect your assets,” the law firm says.
“This legal document functions as a cohabitation property agreement and clarifies finances to avoid lawsuits over issues such as California cohabitation law alimony,” the law firm adds. “While a cohabitation agreement template in California may seem easy, a private plan is safer. ‘Does a cohabitation agreement work?’ “When prepared correctly to meet all the legal requirements of cohabitation, it is a definite yes.”
Some worst-case scenarios: Bay Legal says California law has a “shocking twist” that could make things even more complicated. “This is a legal claim known as the ‘Marvin Action.’ This concept comes from the famous 1976 California Supreme Court case. Marvin / Marvinruled that unmarried couples may sue each other to enforce promises or agreements they allegedly made during their extramarital affairs.” In summary: You need to know the laws in your state.
It’s not too late for your boyfriend to start saving for retirement, and he might even make catch-up contributions now that he’s in his 50s. In addition to high-yield savings accounts and CDs, one can look at a solo 401(k), SEP IRA, Simple IRA, and even traditional or Roth IRAs. “Your 50s are a turning point. There may be light at the end of the tunnel for big expenses like tuition and a mortgage, and your earning power may be peaking,” says Fidelity. “Retirement can last as long as your career lasts.”
Now is the time for him to move beyond holding large amounts of cash and start investing in a diversified, low-cost index fund or exchange-traded fund. Regular contributions over the next 15 years can make a big difference in your retirement. But this should be part of a broader conversation about whether you’re ready to retire and how that might affect your prospects for the lifestyle you want in your 60s and beyond.
For an unmarried man without an employer, health insurance will be a large expense and expense, especially as he gets older and his risk of health events increases. “Healthcare is one of the biggest variables in retirement, and it’s time to be proactive in your 50s,” adds Fidelity. In fact, the asset management firm estimates that a 65-year-old retiring in 2025 will need $172,500 for healthcare expenses throughout retirement, even with Medicare.
We are entering an uncertain period regarding health premiums and deductibles for self-employed individuals. Affordable Care Act premiums have more than doubled after the tax credits expire at the end of 2025, reaching nearly $1,900 per year per subsidized enrollee, according to health research organization KFF. Those earning more than 400% of the federal poverty line are no longer eligible for tax credits.
You need to look out for each other and protect your own interests as well.
