3 Financial Aspects To Consider About Getting Married

February 11, 2019

I’ve always said that there are three things that you need to find in a romantic partner in order for your relationship to thrive:

They share your values.
They are attractive, at least to you.
They have their act together – aka they aren’t a hot mess when it comes to “adulting.”

Criteria number 3 includes money – they don’t have to have a lot or make a lot (unless that’s one of your values) and it’s even ok if they owe a lot, as long as they have their act together about it and are willing to be open and honest, while also working to improve their situation if needed.

If you’ve found someone that checks all three of those boxes, perhaps you’re thinking of making it legal. It turns out that there are financial benefits to be had from that perspective. While I have worked hard to be financially independent, after 4 years of marriage (happy anniversary, babe!), it’s obvious that both of us are better off than if we had opted not to go to City Hall that February day back in 2015. Here are 3 key financial aspects (pros or cons, depending on your situation) to consider about getting married (beyond paying for the wedding):

1. It could lead to better cash flow

First of all, you can save some major money on your daily living expenses. If you’re living with roommates, you already know this – sharing expenses like housing, utilities and food is a definite benefit of sharing your home with someone. And when you’re also sharing the same bed, you may even be able to live in a smaller place than you would with a roommate if money is tight.

The old “opposites attract” adage can play to your advantage here too. When a spender marries a saver, and they are able to find a healthy compromise in their habits that helps them to achieve their goals together, it’s often the spender who has the most benefit because they often have a serious lack of savings and sometimes huge amounts of high interest rate credit card debt.

A saver can balance that out by encouraging the spender spouse to prioritize healthier financial habits — in effect, a saver sometimes ‘saves’ a spender from themselves. Serious caveat here though: this is not about a saver controlling a spenders’ habits nor is it about nagging or one spouse being “better” than the other – it’s about finding a balance that works for both of you, and may also require a saver spouse to loosen up a little bit about money.

2. Taxes – they could be more or less

Once you’re married, you’re required to file that way on your taxes – you choose jointly versus separately – and that could mean you pay less or more, depending on your situation.

For example, if you and your spouse are both high earners and file jointly, that could bump you into the next tax bracket, meaning you’ll pay a higher percentage of some of your income than you would when you were single. But if one of you earns significantly less than the other and you file jointly, your combined income will be taxed in the middle, resulting in a lower tax bracket for the high earner. Lower income couples in the 10% or 12% tax bracket may also see a lower overall tax rate when combining their income.

The standard deduction allowed for married couples is also twice what it is for an individual, while the $10,000 limitation on deducting state and local income taxes is NOT doubled, so you may find yourself claiming the higher standard deduction even if you own a home with mortgage interest and property taxes.

There’s also the fact that you can transfer unlimited amounts of money to your spouse, while you’re limited to $15,000 per year to a non-spouse before gift taxes kick in. This can make estate planning simpler if you’ve accumulated significant savings over the years.

3. Til death do you part

Getting married gives you access to retirement savings options you may not have otherwise had, like a spousal IRA – you’re only able to contribute money to an IRA to the extent that you have earnings, but if you’re married to someone who has earnings and you don’t (perhaps because you’re home caring for children), you may still be eligible to continue saving during those years.

And once your spouse passes away, being legally married will only help you. For example, you’ll qualify for spousal benefits through Social Security and if your spouse happens to die without a will, you’ll automatically have a claim on their assets. (although the rules there vary by state so it’s always better to have a will than not)

You can also roll over and combine their retirement assets with your own when your spouse dies, which can allow you to enjoy that tax-free growth for longer. (There are stricter rules governing withdrawals for non-spouses who are left retirement accounts, which Mark wrote about here.)

Keep the big picture in mind

While there are many financial factors to consider, here’s the truth of the matter: Whether or not getting married is financially beneficial has less to do with the benefits afforded and more about the person you’re actually marrying — and their financial health. As my colleague Cynthia points out, your life partner could end up being your best friend or your worst enemy when it comes to money.