Joint vs. separate accounts: How couples choose to handle finances could impact their financial success

When it comes to handling money, couples have a choice: combine all of their accounts, keep them entirely separate or strive for something in between.

But what is normal?

About 43% of couples who are married, in a civil partnership or living together have joint assets, according to a new survey from CreditCards.com.

Baby boomers are most likely to have only joint accounts, with 49%, followed by Gen Xers, with 48%, versus just 31% of millennials.

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Meanwhile, 45% of younger millennial couples ages 26 through 32 keep their money entirely separately, versus just 20% of Gen Xers and 14% of baby boomers who do the same.

Experts say there’s generally not a right or wrong way for a couple to manage their assets.

“Whatever is the right answer is the one that allows for the most harmonious relationship between two people along the way,” said Jesse Sell, a certified financial planner and managing principal at Prevail Financial Planners in Stillwater, Minnesota.

But whichever way couples choose, they should keep some key tips in mind.

Couples who keep their accounts separate may be more likely to hide financial secrets from their partners, according to Ana Staples, a credit card expert at Bankrate.com.

Even those who choose to pool their money together would benefit from setting aside time to discuss where they are with their finances and where they would like to go.

“This is the kind of topic that makes people feel vulnerable, maybe a little bit defensive, because nobody is perfect when it comes to finances,” Staples said. “Everybody has their own issues, their own fears.”

Ideally, a formal conversation should happen at least once a year, Sell said, so that couples can make sure they are still on the same page.

“Money can be a very emotional topic,” Sell said. “Talking about it regularly is important because if it’s not done intentionally, it kind of gets cast aside and never talked about.”

While couples may strive to combine all their assets in joint accounts, there are some areas that they will have to keep separate, namely retirement accounts.

Many workers have a 401(k) plan or other employer-sponsored plans offered through their jobs. Individual retirement accounts, which can be opened independently of an employer, also do not permit joint ownership.

Nevertheless, couples should make sure they clearly communicate what they are both doing when it comes to investing toward retirement, so they can achieve retirement and financial freedom together, said CFP Jennifer Weber, vice president of financial planning at Weber Asset Management in North New Hyde Park, New York.

Couples should strive to defer 15% of their combined income towards retirement, she said, while 20% or more would be more ideal.

“The more that you save and invest, the better you are for the long term,” Weber said.

Couples should also make sure they are on the same page with 529 college savings plans they invest in on behalf of their children. Notably, those accounts also must be in just one adult’s name.

While couples may come into a relationship with their own investments, they should open a combined after-tax brokerage account to save for goals that are five or more years away, Weber said.

In addition, couples should strive to have at least six months’ living expenses set aside in an emergency fund.

Importantly, couples should make sure they update their beneficiaries for all their accounts as their relationship status changes or new children enter the family, she said.

“The biggest piece of advice that I have is to really have open and honest discussions with one another,” Weber said. “There’s no right way, there’s no one way to do it.”