Money traps to avoid in your new relationship
Finding love later in life brings with it new financial issues to navigate. There are ways to keep a happy balance of love and money.
More Australians are splitting up later in life and then forming new relationships, triggering a whole new set of financial issues for couples and their families.
From difficult former partners, wealth imbalances, property splits, early inheritances or lingering debts, older couples can face a mountain of money traps, and experts say the biggest key to solving them all is being transparent with new partners and all children involved.
NGS Super financial planner Toby Perkins said the median age of marriage continues to rise and his fund is hearing more from members in their 50s and 60s who are starting new chapters.
“The rise of shows like The Golden Bachelor taps into something very real, love later in life is increasingly common,” Mr Perkins said.
“And while it’s emotionally rewarding, it also brings a different set of financial decisions to navigate.”
Mr Perkins said older couples often come with established careers, homes, superannuation and children.
“The best starting point is a completely honest, judgment-free conversation about money,” he said. “Talk about what you both have, what you both owe and what you value. From there, some couples choose to merge everything, others keep things completely separate, but many find a hybrid approach works best.
“The goal isn’t to blend everything. It’s to build something that feels fair, transparent and respectful of the lives you’ve each built so far.”
Property traps
Several of the many money traps for older couples revolve around real estate, and there can be debt, tax and emotional issues.
“Often couples who both own a home will want to retain them, with perhaps one becoming the joint home, and the other being rented out,” Mr Perkins said.
A home rented out to tenants creates income tax and capital gains tax (CGT) issues, and Mr Perkins said transferring ownership can trigger CGT without people realising.
“There can be a reluctance to sell and purchase a new home together, especially when children are still living at home,” he said. “If one person is going to keep an existing property, consider what is going to happen to this in future.”
Divorce rates for over-50s in Australia have doubled in the past three decades while overall divorce rates are down by 33 per cent.
Money coach Karen Eley said some people jump straight into their next serious relationship while others, particularly those who’ve been burned, may take several years.
“When a new relationship involves one person who has gone through the divorce process, often their assets have been significantly reduced,” Ms Eley said.
Checks and imbalances
Ms Eley, the founder of Women Talking Finance, said she often sees situations where one member of a new couple has strong financial foundations and the other does not.
“Often this financial inequality does cause challenges in the relationship around emotions that come out such as guilt, shame, frustration, which can play out in other areas of their relationship and life,” she said.
“This can lead to resentment if one person gets held back and not able to travel despite being able to afford it, or resentment that they are deferring their goals to save, or spend on a holiday they can’t really afford.”
Ms Eley said money is an emotionally charged topic but it is a trap for people to avoid discussing it.
“Consider money dates to focus on your combined finances and how you can support each other,” she said.
“Seeking expert help from a financial or relationship professional can also help if having conversations is challenging for you or your discussions aren’t going anywhere.
“We often think of investing as the risky part of money but in my experience, the real risk is avoiding honest conversations about it with your partner.”
She said other traps for new relationships include:
* Jumping in too quickly by merging finances or living arrangements early.
* Failing to address financial inequities with the misguided belief they will work out over time.
* Being dishonest about your money history, including debts, credit scores or inheritances.
* Taking on a partner’s debts, which can lead to resentment and other challenging dynamics.
“It’s the first thing that gets thrown up in a fight: ‘I had to pay your debt off’.”
Talk it out
Ms Eley said open and honest conversations are necessary, even if difficult to have.
“While our finances are rational and logical, humans are emotional beings so we need to approach any discussions about money understanding this,” she said.
Kat Milner and her husband Paul married when they were 45 and 40 respectively, coming from different backgrounds in different countries.
“He was an Australian and I was American … he came from an upper middle-class family and my background was very blue collar,” Ms Milner said.
“We had very different approaches to saving and spending, and it took a lot of hours for us to finally decide to have yours/mine/ours approach.
“We were both working and contributing to the household. Because both my first husband and his first wife were spenders and bad communicators, both of us were nervous about trusting someone else with our financial security.”
Ms Milner said the couple have operated joint accounts for bills and savings but separate personal accounts.
“Have open and candid conversations about what is important to you,” she said.
“Don’t just assume that the other one already knows or will figure it out.”
The couple is considering estate planning. “We have spent quite a bit of time talking it through – end of life care, who would be the primary and secondary beneficiary, medical power of attorney. Now it’s just a matter of saving the money for the lawyers to draw up the paperwork,” Ms Milner said.
“We’re also planning to have our funeral expenses paid in advance, so our son doesn’t have to worry about it.”
Don’t forget super
Mr Perkins from NGS said superannuation can cause misunderstandings.
“Many people think it works like a will but it doesn’t,” he said.
“If you haven’t made a binding death nomination, your super could end up somewhere unexpected.”
Children are at the centre of many discussions among older partners, and Mr Perkins said new relationships can be confronting for adult children too, “especially if they feel a parent’s financial legacy is at stake”.
“The best antidote is transparency. Talk to your children early. Explain what’s changing, what’s not and how you’re thinking about the future. Then make sure your estate plan reflects that.”
Mr Perkins said NGS often works with estate lawyers to help people navigate these tricky conversations, and tools such as testamentary trusts and binding financial agreements are considered.
“It’s not about picking sides – it’s about clarity, fairness and showing your loved ones that everyone’s interests have been thoughtfully considered,” he said.
Superannuation is often managed separately, but couples approaching retirement can consider strategies to help qualify for an age pension, particularly where there is an age gap, Mr Perkins said.
“There can be benefits in looking at restructuring assets and superannuation to potentially allow one member of the couple to access some – or more – age pension.”
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