Couples are keeping millions of pounds worth of money secrets from each other and potentially threatening their prospects of a comfortable retirement later in life, according to new research from Prudential.
The insurer’s annual survey of co-habiting couples over the age of 40 is now in its sixth year and found that huge numbers of people hide debts, savings and even income from their other halves.
The results reveal that 10% have secret savings, investments and/or pension pots that their partner doesn’t know about, with an average value of £30,300. And 15% have hidden debts they don’t own up to, averaging £8,000 .
Meanwhile, 12% of those surveyed say their partner doesn’t know how much they earn.
Of those who keep some or all of their earnings secret, 27% do so to maintain their independence, while 23% hide their earnings to maintain their financial security in case of a break up. However, a generous one in 10 (nine%) say that they use their secret earnings to treat their partner.
Vince Smith-Hughes, retirement spokesperson at Prudential, said: “Hiding such significant sums in savings or debts from a partner makes financial planning for the future very difficult. For example, taking unexpected debts into retirement could make a significant dent in the joint income that the couple was expecting to be able to live on.
“In addition, keeping income or stashes of cash secret could mean that couples are not making the most of the pension saving tax relief or allowances available to them. A consultation with a professional financial adviser should benefit most couples in planning for their retirement, provided they are open and honest with each other about their individual finances.”
Prudential’s research also sheds some light on why people choose to keep some aspects of their finances secret. Worryingly, given the potential tax benefits of joint pension saving, the most common reason cited for having secret savings is so they can be used to help fund retirement (29%) – an approach more popular with women (36%) than men (22%). Ensuring financial security in the event of a relationship break-up (27%) is the second most popular reason given for maintaining a secret stash.
60% of those with secret debts say they arose from general living costs. However, 15% attribute their secret debts to overspending as the result of an emotional event such as a previous relationship break-up. Money spent on holidays and travelling is the main source of debt for 12%.
Smith-Hughes added: “The pension saving and retirement income landscape has changed significantly in the last year and there’s no guarantee that there won’t be further changes around the corner. The Government’s Pension Wise independent guidance service is now available to anyone over 50 with defined contribution pension savings and should prove to be a useful service for most couples looking to make joint decisions about their retirement finances.”
A lack of financial trust in their partner is a recurring theme among many of those who keep their financial affairs hidden. 11% of secret savers admit to keeping shtum because they don’t trust their partner to make sound financial decisions. 18% of those who conceal their real income do so for the same reasons.