Cohabitation and Financial Well-Being

October 9, 2019The Topic: Cohabitation and Financial Well-BeingThe News Story: How Cohabitation Became the Hottest Life-Strategy in TownThe New Research: Long-Term Financial Damage The media remains fascinated with the practice of cohabitation, and with it the dream that marriage is “becoming outdated” or “evolving.” The latest evidence of this fascination is a Psychology Today post arguing that “Cohabitation is up sharply. It may be a sign that many are re-thinking marriage.” Says the story, “A new U.S. Census Bureau report shows that the number of unmarried partners living together has almost tripled in the past two decades, from 6 million to 17 million.” The profile of these cohabiters has also changed: They tend to be older, more educated, and make more money than they once did. According to the story, “The proportion making less than $30,000 annually (in 2017 dollars) dipped from 64 percent in 1996 to 53 percent in 2017. In addition, among the college-educated, two-earner couples were more prevalent among cohabitators (78 percent) than married adults (67 percent).” In short, “among college-educated adults, the median-adjusted household income of cohabitators exceeded that of married adults.” But try as they might, the media cannot talk away the profound differences between marriage and cohabitation. And when it comes to finances, cohabitation brings with it short-term gains, but long-term losses.  (Source: Elyakim Kislev, Psychology Today, “How Cohabitation Became the Hottest Life-Strategy in Town,” October 5, 2019.) The New Research: Long-Term Financial Damage Despite mounting evidence concerning the ill effects of cohabitation, more and more young people are turning to this living arrangement as a precursor to—or substitute for—traditional marriage. But a new study out of the field of financial planning reveals yet another danger to the practice of cohabitation—significantly lessened financial wealth.
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