Have you ever considered the financial perks of tying the knot? And does it marriage make financial sense from a financial standpoint? Let’s look at the financial pros and cons of marriage.
Pros of Marriage
Marriage doubles your income, which you can use to tackle bills. If you and your spouse decide to split your expenses, living expenses like rent, a mortgage, utilities, and groceries can be a game-changer for your budget.
And this pooled income can help you tackle debt faster and boost your savings.
When it comes to paying income taxes, marriage can be a pro or a con, depending on the situation. Your combined income could place you in a lower tax bracket.
On the flip side, if both of you have similar high incomes, you might end up paying more in taxes as a married couple.
But filing separately may not always be beneficial since you could miss out on certain deductions and credits, leading to higher tax bills.
With workplace benefits as a married couple, you could have access to a range of retirement savings plans, maximizing your retirement savings.
Plus, if you’re both employed and have health insurance through your respective jobs, you can weigh the options and pick the best one for your household. Dental and vision coverage may also expand through a spouse’s employer.
Marriage opens the door to some legal perks. From joint filing of taxes to inheriting your spouse’s Social Security or disability benefits, the legal system gives you some advantages.
As unmarried partners, if something were to happen to either of you, sorting out finances and transferring assets would be more complicated without legal documents like powers of attorney and wills in place.
Marriage provides some automatic legal protections for inheritance and medical decisions.
Social Security benefits received as a married couple are greater than what you’d get as a single. A spouse can claim benefits based on their partner’s work history and earnings.
This can make a huge difference in retirement income security.
Being married usually leads to increased savings. Studies have shown that married individuals tend to be more proactive in saving for retirement, likely due to the sense of commitment that comes with marriage.
A spousal IRA allows couples to contribute to an IRA even if one spouse is not earning taxable income.
Cons of Marriage
Weddings can be expensive affairs. The average cost of a wedding in the U.S. is around $28,000. Studies show that nearly 20% of brides and grooms take on new debt to fund their wedding, borrowing on average $10,000.
Common forms of wedding debt include personal loans and high interest rate credit cards.
The Marriage Penalty. Yes, it’s a thing.
If you and your spouse are both high-earners, you might face a marriage penalty. It’s not romantic.
Essentially, your combined tax liability exceeds what you’d pay if you were single.
You inherit your spouse’s debts and spending habits. This is a risk many people don’t consider before getting married.
For instance, if one partner accrues massive debts from student loans or credit cards before or during the marriage, the other becomes partially legally responsible for paying them off in many states.
And bankruptcy filed by one spouse can impact the credit of both.
Also, conflicting spending habits and varying levels of debt can make it messy to untangle if your marriage heads south.
Half of all marriages in the U.S. end in divorce. Divorce brings with it large legal fees and, typically, the division of assets between spouses.
Depending on income, assets owned, and length of marriage, one partner may have to pay the other ongoing alimony support as well.
All the financial stability you gained over the years of marriage can evaporate in a split.
Also, remarriage can affect financial benefits from a previous marriage, such as alimony or child support, requiring working with an attorney or financial planner for counsel.
The Verdict on Marriage and Financial Sense
Weighing all the pros and cons from a financial perspective, marriage doesn’t offer a clear-cut advantage or disadvantage.
A lot depends on your individual tax situation, income, insurance needs, and debts.
Being unmarried provides you with more independence and financial boundaries between partners. You can spend on areas that you decide on without needing to get approval.
But unmarried couples tend to have less savings and also lack the legal protections and social benefits of marriage.
In a healthy relationship, financial decision-making should be a joint effort, regardless of income differences. But I’ve also seen many marriages where one person controls the money.
You should go into marriage with a clear understanding of what your finances together will look like, with eyes wide open.
