New research from Prudential has found that couples are keeping debts, savings, investments and even how much they earn secret from one another, often in a bid to maintain their financial independence, but in doing so are jeopardising their chances of a comfortable retirement.
This revelation comes as part of the findings of Prudential’s latest annual research into the retirement aspirations and financial planning of co-habiting couples over the age of 40.
The study found that 17% admit their partner does not know how much they earn. 46% of those with income secrets said that their basic salary is higher than their partner thinks it is, while 23% earn extra money from overtime or additional cash-in-hand jobs which they don’t tell their partner about.
27% of those keeping their true income a secret are doing so to give themselves financial security in case they ever split up, while 15% plan to use it to pay towards something specific such as a new car or a dream holiday.
9% confessed to having opened savings accounts and made investments without the knowledge of their partner, and 38% of them said that they have £50,000 or more hidden away.
Despite the potential tax benefits for many couples of jointly saving into a pension, the most popular reason given by one in four secret savers (27%) is to help fund their retirement. Meanwhile, ensuring their own financial security in case of a relationship break up is the other significant reason for maintaining a secret stash for 21% of those who keep their partners in the dark.
Trusting their partner with joint finances seems to be a real issue for those with secret savings. One in five secret savers (22%) said they are not saving for anything specific – they just don’t want their spouse or partner to be able to access all of their money. While one in ten (11%) said that they don’t trust their partner to make the right decisions about their finances so they are keeping the money aside for the good of their joint financial security.
15% have debts averaging more than £9,000 from credit card bills, bank loans or even mortgages that their partner does not know about..
49% of those with hidden debts said they were mainly as a result of the general cost of living. However 7% said that an emotional event such as a relationship break-up earlier in their life was the cause of their debt. A further 6% are still paying off debts from past relationships such as joint mortgages and six% said they have inherited debts from family or friends.
Kirsty Anderson, a retirement income spokesperson at Prudential, said: “Each year we speak to couples about money and retirement planning and each year we see large numbers of people making secret financial decisions, often assuming they’re doing what’s best for them and their partner.
“However, many of the tax benefits of pension saving are more valuable when applied to a couple’s finances as a whole, so secret money decisions could actually be having the opposite to their desired effect and jeopardising future income in retirement. In many cases people’s income will inevitably fall when the time comes to give up work, and the impact of repaying a secret debt when retired shouldn’t be underestimated.
“Having an open and honest conversation about savings, income and debt can help couples avoid any nasty shocks when the time comes for one or both of them to retire. A joint consultation with a professional financial adviser should also help many couples make the right decisions about getting their finances in the best shape and ensure they are doing as much as possible to prepare for a comfortable retirement.”
