Today, it’s common for unmarried romantic partners to live together. Some people even insist that this “trial run” is the best way to get to know a potential life partner before committing for the long haul.
In fact, the number of American adults living with their unmarried partner is on the rise, increasing by 29 percent since 2007 to reach 18 million in 2016, according to Pew Research.
Some cohabitors may view living together as a way to save money, reduce rent and pool incomes, but their living arrangement may not work to improve their financial health, according to a recent study from Iowa State University published in the Journal of Financial Planning.
“Cohabitors are accumulating less wealth,” says Cassandra Dorius, the study’s co-author and assistant professor of human development and family studies at Iowa State.
The research, which analyzed data from the 1997 cohort of the National Longitudinal Survey of Youth, found that cohabitors have lower net worth and have accumulated fewer financial assets than married couples who’d never cohabited, with the gap in wealth increasing with the number of times a person has cohabited.
When compared with married, never-cohabited respondents, first-time cohabitors had $26,927 less in wealth, according to the survey. Serial cohabitors had $33,809 less wealth than those who were married and hadn’t cohabited. Married people who had cohabited two or more times before marriage had $18,265 less in wealth.
Dorius notes that unmarried couples living together may focus their financial energies on accumulating nonfinancial assets, such as furniture, boats, artwork and cars, perhaps to build a home together. Married couples, on the other hand, accumulate more financial assets, such as stocks, bonds and a primary residence, improving their net worth.
