trueblue22, in one of your earlier posts you said I always found him a bit controlling and have come into my own since retiring.
This, I think, is the nub of the matter. He thinks it is his right to control you and everything you do and resents you asserting any independence.
To me, his request that you live separate but together is another example of his controlling behaviour. He wants a nice stay at home wife whose only interest in life is serving him. I doubt if he has any desire for the marriage to break-up because he would then have to live on his own and look after himself, the last thing he wants, and his chances of finding another woman prepared to give up the whole of her life to serve him is very remote indeed.
He is hoping that by demanding this separate but together life he can intimidate you and make you so afraid of him taking another step forward and asking for a separation that you will knuckle down, give up your outside interests and subsume your life into his.
Call his bluff, go and see the Citizen's Advice Bureau (CAB), a solicitor , or possibly even Age UK (previously Age Concern) and take advice about your rights, to the house, money and benefits and then call his bluff, say that separation while together is unacceptable, that you want a complete separation and you would like him to move out. The last thing he would want to do. He will either take up the offer, proving that that was the way he was heading anyway (but, no doubt, with you moving out) or he will become more conciliatory and you will be the one in control.