Couples’ money secrets pose a risk to their financial futures

Couples are risking their financial futures by hiding savings, investments, debts and even income from one another, according to new research from Prudential.
 
The survey analysing attitudes to money and retirement planning among couples aged over 40 found that more than one in five (22 per cent) people in a relationship put the couple’s comfortable retirement at risk by keeping debts, worth an average of £7,800, concealed from their other halves.
 
When asked how these hidden debts arose, just under half (48 per cent) of respondents said that they had borrowed to cover every day living costs, while a third (34 per cent) ran up debts through overspending due to an emotional event such as the break up of a previous relationship. A further 16 per cent had borrowed money to make payments to an ex-partner, for example for child support.
 
Additionally, one in four (26 per cent) of those surveyed admitted to keeping a stash of money secret from their partner, with an average secret savings pot of £4,000. A fifth (20 per cent) say their secret stash is to pay for something specific in the future such as a car or a dream holiday, while 22 per cent are keeping their money hidden to help fund their retirement.
 
And it’s not just savings and debts that couples hide from each other – 13 per cent have never told their partner what they earn while one in ten (10 per cent) claim their partner has a false impression of their earnings, evenly split between overestimating and underestimating. Around two-fifths (38 per cent) of those who do not tell the whole truth about their income say their basic salary is higher than their partner thinks it is, while 31 per cent have received at least one bonus payment that they kept quiet from their partner. A further 31 per cent do not disclose additional income earned through overtime or ‘cash in hand’ work.
 
Vince Smith-Hughes, retirement expert at Prudential, commented: “Many people may have perfectly valid reasons for keeping a stash of savings or personal debts secret from their other halves. However, these financial secrets could pose a serious risk to a couple’s future retirement income.
 
“For example, if a couple reach retirement with savings that are secret from one another they may have missed out on years of tax relief that they would have been entitled to if the money had been invested in a pension. Meanwhile, making repayments in retirement on an unexpected debt will have an obviously negative impact on a couple’s income.
 
“Having those potentially awkward conversations so that both partners get a full understanding of their joint financial circumstances is an important first step for a couple planning for a comfortable retirement. Independent bodies such as The Pensions Advisory Service and the Money Advice Service can offer valuable information on making the right financial decisions in the run up to retirement. Consulting a financial adviser can also help to make those difficult conversations a little easier.”
 
The reasons given for not coming clean on finances with partners vary. For most, (51 per cent) the main motive for keeping the extra income separate is to maintain independence – however a generous 29 per cent do so to buy gifts for their other half. More than a fifth (22 per cent) of the secret savers say they don’t trust their partners’ financial decision making, while one in six 16 per cent keep secret funds to protect themselves financially in case of a future split.