What Are the Financial Benefits of Marriage?
by Andrea Kornstein
We all know there are many good reasons to get hitched. For starters, marriage provides you with the perfect opportunity to register for a pricey KitchenAid mixer. It also gives you an excuse to take that long, indulgent honeymoon you’ve been fantasizing about. And, apparently, you can reap the rewards of a lifetime of unconditional love and support. But the advantages of wedded bliss don’t end there.
Did you know there are numerous financial benefits to marriage as well? Yes indeed! To demonstrate, we’ve cobbled together a list of the top seven economic perks for married folks:
Without a doubt, one of the biggest financial benefits of marriage is the ability to file joint taxes. In fact, as financial planner Simon Brady (CFP®, CDFA) notes, this is “the most advantaged of all the tax filing statuses.” That’s for several reasons.
For starters, it’s relatively common for one spouse to earn more than the other. In such a scenario, the person earning less money can act as a shelter of sorts, allowing their partner to land in a lower tax bracket. This also extends to households where only one partner is working. Additionally, couples filing jointly can take a standard deduction that’s double that of a single-filer deduction.
Fortunately, there’s no need to rush off to the altar. Brady says that as long as you’re married by December 31st, that will “be considered…your status for the [entire] year.”
This isn’t something you can capitalize on immediately. But another great byproduct of marriage is the fact that you may be eligible to claim your own Social Security benefits or up to 50% of your spouse’s — even if you have never paid into Social Security yourself.
Just as critically, if you decide to claim your partner’s, this won’t affect their ability to collect. They get the same amount regardless. What’s more, you should still be eligible to receive payment in the event of disability or death. There are caveats, of course. You can check out the fine print on spousal Social Security benefits here.
I would strongly suggest that both parties in a committed relationship but not married talk to a financial planner or an estate attorney about how to financially care for a partner in the case of death. – Simon Brady, CFP®, CDFA
As a married couple, you and your spouse have the ability to transfer assets to each other without fear of being taxed. And should one of you pass away, the other will not have to pay death taxes on the inheritance.
Speaking of inheritance, Brady also points out that if someone dies without a will, “most states’ [have] intestacy laws…[which dictate that] the majority of the assets be directed to a spouse.” Sadly, this isn’t true for domestic partners who, for all intents and purposes, are viewed as strangers in the eyes of the law. “The nature of the relationship is not taken into account at all,” says Brady.
Marriage is also beneficial when it comes to retirement, specifically IRAs. After all, spouses are able to inherit each other’s plans as well as bundle accounts. What’s more, partners can open and contribute to a spousal IRA even if they are not currently working. Individuals who are single and unemployed don’t have that option. This ultimately enables couples to build up their retirement assets more quickly.
After you get married, you might be inclined to open up a joint bank account. This is usually a smart move because it simplifies household spending and saving. It also leads to more financial transparency between spouses. Moreover, it grants both partners equal access to the account. So, in the event of an emergency or a death, the healthy/surviving spouse would still have immediate use of the funds. You can avoid red tape and bureaucratic headaches during an especially trying time. As an additional benefit, if one spouse has a weaker credit score, they can also use this new account to help boost their rating.
Look, at some point most of us have joked about marrying someone purely for their health insurance. While we don’t recommend getting hitched for that reason alone, it’s certainly one of the financial benefits of marriage. Following your wedding, you and your partner should be able to add each other to your respective insurance plans.
This is advantageous if someone doesn’t have coverage or if one spouse’s employer offers a better plan. Additionally, you’ll likely end up paying less for a single policy that covers two people versus remaining on separate plans. Don’t forget to compare your individual insurance options before one of you jumps ship, though!
Of course, the benefits don’t merely stop with health insurance. You and your spouse are likely to receive lower rates on both auto and homeowners insurance as well. That’s because companies typically offer discounts to married couples. Further, similar to healthcare, auto insurance is often cheaper if you bundle multiple vehicles under one policy. Still want more proof? A study conducted by Consumer Reports found that married people saved an average of $525 a year on their car insurance (depending on the state and provider).
There’s no question that you shouldn’t enter into marriage cavalierly. After all, you don’t want to say “I do” simply because it would be nice to have someone to split the cable bill with. And it’s definitely not the right path for every relationship. But you can’t deny there are many advantages. If you and your partner believe you’re committed for the long haul, it makes sense to consider the financial benefits of marriage.
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