Does getting married really help you financially?
Experts explain the financial perks of marriage versus singledom.
Being married, we are told, has a lot of financial perks. This is true to my personal experience. I don't think I could have bought a home or embarked on a career as a writer without the stability of living in a two-income home. But the way I see it, it wasn’t so much the legal fact of marriage that made that possible; it was the financial cooperation. Still, married couples benefit from tax breaks and the like, right? After all, even some economists have encouraged marrying for money.
“It is generally more financially advantageous to be married,” Brad Biren, a financial advisor in Des Moines, Iowa tells me. That said, this is one of those things that’s true for most of the people most of the time, but isn’t true for every single person in every single situation. I asked financial experts to help break down if married people are really better off — and what single folks can do to make up the difference. Here’s how the single life compares to marriage, financially speaking.
What are the tax benefits of marriage?
One of the biggest financial perks of marriage is its impact on taxes. “Couples usually pay a lower total tax bill than they would as individuals,” Jesse Cramer, a financial advisor in Rochester, New York, says, adding the caveat that this is really only true if the people in the marriage have different income levels. “Couples with significant differences in salaries are all-but-guaranteed to have a lower tax bill.” Couples who make about the same amount of money may find they’re slapped with what financial advisors call a “marriage tax penalty” meaning their tax burden increases after marriage along with their doubled household income. This is less true if only one person in a couple works or doesn’t make enough to bump the couple into a new tax bracket.
But the tax benefits of being married aren’t just about yearly income taxes. “One of the biggest advantages to marriage is being able to move assets between one another without a taxable event occurring,” Biren says. Basically, if you want to give a house or some other sizable asset to your spouse, you can do it without either of you paying gift taxes, which are incurred when you give someone cash or goods worth more than $15,000. But if you want to give, say, your platonic life partner something big, like a 10-year-old sedan with reasonable mileage, the government will tax you for it.
All told, Biren says, married people can “gift, save, and invest nearly twice as much money as a single person without IRS penalties.” Having the ability to practically double what you put toward retirement is a pretty big deal, especially considering the fact that many single millennials and Gen Zers aren’t saving enough for retirement, according to CNBC.
That said, singledom isn’t without its financial perks. Being single is beneficial from a tax perspective if you have kids, because you can claim them as dependents and get a tax break (in addition to a lower overall income), Biren explains. In other words, as a single person, you’ll incur lower taxes and potentially have more deductions.
The bottom line: When it comes to taxes, marriage offers a major financial benefit if there’s a big difference between two partners’ incomes, you want to share property, or you’re saving for retirement. Otherwise, it’s pretty okay to be single, tax-wise.
What are the everyday financial benefits of marriage?
Of course, taxes are only part of the financial picture. When my spouse and I split, I realized it basically cost the same amount of money in bills to keep my house in order — only I now had to do it on one income. That dramatically changed my lifestyle, and I’m still playing financial catch-up five years later. While it’s not exactly surprising, most experts agree that sharing expenses is one of the biggest benefits of being partnered.
Then again, there are also some money advantages of being single when it comes to everyday life issues. “The largest ones tend to be avoiding the negative financial scenarios that a partner might bring — like debt, credit, and overspending,” Cramer says. When you’re married, you get the bad with the good. If your spouse has debt, so do you. If they go on a wild gambling bender, that’s going to be a problem you both pay for.
“The nicest thing about being single is that you answer to one person: yourself,” Cramer says. “You can set higher savings goals. You can choose to spend money precisely in the manner you wish.”
How does being married affect health spending?
If there’s anything we’ve learned in the past few years, it’s the value of health insurance. Unfortunately, that’s one of the areas in which married people really do have an advantage. In some cases, “only allow spouses and children [can] be [added to a person’s] health insurance,” Beth Logan, a financial advisor in Massachusetts, tells Mic. Cramer, who’s getting married soon, is about to experience this benefit firsthand; he says he’s already figured out that he and his wife-to-be will save more than $300 a month on health insurance by having a shared policy rather than two separate policies.
Logan notes that some companies do allow domestic partners to be added to insurance plans, but that’s not as common as we all might like it to be — and it depends on a lot of factors, like state and local laws, an insurer’s policy on domestic partnership, and an employer’s HR practices. According to asset management company Mercer’s 2021 National Survey of Employer-Sponsored Health Plans, 53% of employers with 500 or more employees cover domestic partners in their benefits packages, but because domestic partnership benefits aren’t protected by federal law, much depends on what state you live in.
There are even more advantages for married people as we age and require more extensive care. To be eligible for Medicaid that covers long-term care, for example, a single person can only have $2,000 in assets in some states — like Iowa — but a married couple can have up to about $128,000 in assets, as long as only one spouse has Medicaid.
Is there anything single people can do to catch up?
“The best thing a single person can do is to find a financial planner they trust,” Biren says. You can even work with someone who specializes in helping single folks or non-traditional families. This may sound like a plug, but the reality is that most of us are undereducated when it comes to money and taxes, and having professional help can save you a lot of dough.
But, for the record, all of the financial experts I spoke with told me they never recommend their clients get married for the money, even if it could be economically advantageous. “A bad relationship is not worth it,” Logan says. And, she points out, divorce is really, really expensive. The most advantageous situation, Logan says, is to share a home, living expenses, and health insurance with a supportive partner. Godspeed to all on that one.