Couples across the UK 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 Prudential1.
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 one in 10 (10 per cent) have secret savings, investments and/or pension pots that their partner doesn’t know about, with an average value of £30,300. And one in seven (15 per cent) have hidden debts they don’t own up to, averaging £8,000 .
My other half doesn’t know what I really earn…
Meanwhile, one in eight (12 per cent) of those surveyed say their partner doesn’t know how much they earn.
Of those who keep some or all of their earnings secret, more than a quarter (27 per cent) do so to maintain their independence, while 23 per cent hide their earnings to maintain their financial security in case of a break up. However, a generous one in 10 (nine per cent) say that they use their secret earnings to treat their partner.
A spokesman for 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.”
I keep my finances secret because…
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 per cent) – an approach more popular with women (36 per cent) than men (22 per cent). Ensuring financial security in the event of a relationship break-up (27 per cent) is the second most popular reason given for maintaining a secret stash.
How my secret debts came about…
The majority (60 per cent) of those with secret debts say they arose from general living costs. However, nearly one in seven (15 per cent) 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 one in eight (12 per cent).
I keep money secrets for both our benefit…
A lack of financial trust in their partner is a recurring theme among many of those who keep their financial affairs hidden. Eleven per cent of secret savers admit to keeping shtum because they don’t trust their partner to make sound financial decisions. Almost one in five (18 per cent) of those who conceal their real income do so for the same reasons.