Mellody Hobson: Tips for Cohabitating Couples

The number of couples choosing to live together sans marriage has increased dramatically over the past several years, and seniors are no exception. According to the Census Bureau, the number of cohabitating couples has nearly doubled in the last decade.

Unlike couples in their 20s, who may decide to live together as a step toward marriage, many couples in their 60s and older choose to move in together but have no intention of taking that walk down the aisle.

Why are seniors making the move without the vows?

While every couple has different reasons, many seniors are choosing to enter into domestic relationships without the legal obligations. For some, it is the memory of a previously failed marriage (more second marriages end in divorce -- 60 percent versus 50 percent). For others, it may be the anxiety of an expensive wedding. But for many, it is the fear of financial loss and the desire to protect their current assets.

Many seniors who depend upon income from a previous spouse's pension, Social Security or medical insurance fear the financial loss associated with remarriage. Others worry that remarriage will pose unintended risk to their children's inheritances.

What are key financial decisions a senior couple should consider before moving in together?

The key factors to weigh are:

Loss of military and pension benefits: In a traditional private pension plan, you may be entitled to receive a benefit from your spouse's plan when he or she dies. However, if you remarry, you will forfeit any pension benefits owed to you from your previous spouse.

Social Security benefits: If you remarry after age 60 (50 if disabled), you can still collect benefits on your former spouse's record. When you reach age 62 or older, you may get retirement benefits on the record of your new spouse if they are higher. Your remarriage would have no effect on the benefits being paid to your children.

What's the best way to come to an agreement about what is yours versus what is theirs?

Before you jump over the threshold, consider drawing up a cohabitation agreement. Think of this like a "pre-nup" agreement without the "nup." This document will clearly spell out all ownership and financial obligations for individuals living with a partner that is not a spouse.

By making it crystal clear from the beginning, there can be no legal hassles or financial losses if the couple decides to split.

How can couples protect their financial assets and make sure their families are fairly represented, as well?

Update your will: It is an excellent idea to update your will when entering into a new domestic relationship. Both parties need to be clear about the distribution of their assets, including the place of residence and all of its contents, in case something should happen to either partner.

Assign power of attorney: Assigning power of attorney is another way to guarantee your wishes are carried out should you be unable to make decisions yourself. This also includes medical power of attorney for health decisions and end-of-life preparations.

Update your beneficiaries: It is also a good idea for all seniors considering living with another individual to update their beneficiaries under any life insurance plans or retirement accounts.

Maintain your own financial identity: You should continue to keep a separate bank account and one credit card. Once you commingle all your finances -- for good or bad -- you and your partner are in it together, meaning you are both legally liable for any debt.

Mellody Hobson, president of Ariel Capital Management ( in Chicago, is ABC News' personal finance expert. Ariel associate Matthew Yale contributed to this report.