The number of unmarried adults in the United States has reached its highest level since tracking of this statistic began, reports the U.S. Census Bureau. In a publication titled Families and Living Arrangements: 2012, the bureau writes: Cohabitation has rapidly expanded in recent decades, led primarily by changes in young adults’ living arrangements.
Credit unions who are focused on attracting younger members can’t afford to ignore this trend. The state of the economy and subsequent financial uncertainty have delayed marriage and child bearing for some young adults in recent years; however, the overall tendency of American adults to remain single goes deeper than economic considerations.
As the charts below demonstrate, more women in particular are unmarried today than at any point since 1950.
And as this graph illustrates, the number of unmarried households both with and without children is expanding.
A Singles Economy
A September 12 Bloomberg Businessweek article discusses how this increase in single status is changing the economy. The article leads with a review of a report by economist Edward Yardeni that says the number of unmarried Americans has increased 37% since 1976. Today, more than half of American adults are single, and their prevalence in the workforce have both positive and negative consequences for the economy. According to Businessweek, single people are more mobile and less confined by homeownership, which means they are more able to take risks such as changing jobs or moving to a new location. However, they are also more sensitive to job losses or illness, and their ability to reduce spending as necessary can make a mark on the economy.
From a credit union perspective, reaching these members might require a different approach to critical life stage marketing and perhaps the addition of products and services geared specifically toward singles and unmarried couples. Some credit unions already offer mortgage products that help these members purchase homes.
For example, NASA Federal Credit Union ($1.3B, Bowie, MD) allows the parents of young adult borrowers who might not yet have the credit history necessary to get a top-notch deal to temporarily cosign on a mortgage with their child. These individuals don’t need to live in the home and can remove themselves from the loan after five years, once the younger primary borrower establishes a history with the credit union.
Single-income households might also be more receptive to add-ons such as job loss protection plans that help cover mortgage payments in the event of unforeseen unemployment. SB-1 Federal Credit Union ($579.0M, Philadelphia, PA) partners with AnnieMac to offer job loss insurance coverage and home warranty policies. Others, like Navy Federal Credit Union ($62.5B, Merrifield, VA), offer optional payment protection plans to help members meet their obligations in the event of a disability or unemployment.
Challenges For Unmarried Couples
The map below shows the concentration of unmarried households with children. However, even credit unions in states that have fewer unmarried households with children have an opportunity to serve the growing number of members who are not benefitting from the legal protections that marriage provides.
Source: U.S. Census Bureau’s America’s Families and Living Arrangements: 2012
According to a May 2014 article in U.S. News & World Report, unmarried couples must employ different strategies from married couples to protect their finances and property, and the newspaper offers a list of 11 financial documents for unmarried couples.
All members should have a will or living trust, but this is critical for unmarried couples. Powers of attorney and living wills provide partners with the ability to make decisions should one of them fall ill or become seriously injured. Couples should also consider how to cover shared expenses and protect joint property in the event one partner becomes ill. Failure to do so can have severe, often unintended consequences on the other. And finally, unmarried couples can clearly spell out financial responsibilities and provide personal protection through domestic partnership agreements.
Financial Advice And More For Unmarried Couples
Beyond providing products and services that meet the needs of singles, credit unions should also take seriously their role as a trusted provider of financial education. True North Federal Credit Union ($128.3M, Juneau, AK) offers these five tips to unmarried couples on how to minimize the risk of living together: create a living together agreement, know your partner’s financial history before taking on joint liabilities, be choosy about titling property, use co-ownership agreements, and develop retirement and estate plans. And Coors Credit Union ($180.5M, Golden, CO) blogged about homeownership considerations for unmarried couples.
As credit unions take a fresh look at the demographics of their membership and community during 2015 planning, they’d do well to also consider the changing household dynamics across the Unites States and how the credit union might serve these members’ needs.
Beyond an increasing number of singles, such reflection might uncover other surprising trends to help inform the credit union’s strategy.