- Financial stability is a major factor in Americans’ decision to get married.
- We asked experts to weigh in on the biggest financial advantages of tying the knot.
- They said marriage comes with a number of monetary benefits, including potentially lower tax rates and better insurance options.
- Visit Business Insider’s homepage for more stories.
When it comes to the qualities people look for in a mate, wealth alone is far from the deciding factor.
That said, there are several financially-related reasons people get married, from the tax benefits both partners receive to the professional opportunities that marriage can open up.
According to a survey by The Ascent, the most attractive money-related traits are those that pertain to conscientious financial habits – having savings goals, following a budget, and maintaining full-time employment took the top three spots on the list.
It’s no surprise, then, that financial stability is one of the biggest make-or-break factors in the decision to tie the knot for American couples.
We spoke to experts in personal finance and relationships to learn the biggest reasons walking down the aisle may make good fiscal sense. Here are the top money-related reasons people get married.
Lower tax rates
Married individuals who file their taxes jointly enjoy wider tax brackets than those who are single or married filing separately.
“These larger brackets keep more money at lower tax rates and allow couples to take advantage of a lesser tax burden on their joint incomes, resulting in a lower effective tax rate,” Riley Adams, an accountant and personal finance blogger, told Business Insider.
In layman’s terms, you can earn more as a couple and pay less in taxes overall. For example, for the 2019 tax year, a single filer earning between $US39,476 and $US84,200 would be in the 24% tax bracket. However, a married couple could earn as much as $US168,400 in combined income and still be in that same tax bracket.
The income tax benefits are most pronounced when one partner makes significantly more than the other, because the partner with the lower income will drop the other into a lower tax bracket.
A bigger standard deduction
The standard deduction is the dollar figure you can subtract from your earnings before income tax is applied, assuming you don’t itemize your deductions.
“As with larger tax brackets, married couples also enjoy twice the size of standard deduction as single filers,” Adams said.
The standard deduction for married couples filing jointly is $US24,400 for the 2019 tax year, compared to $US12,200 for single individuals.
Double the credit card perks
If you know how to play the game, you can effectively double your credit card rewards points or miles.
Brooklyn Lowery, a senior manager with CardRatings.com, told Business Insider that married couples can start with separate credit cards to take advantage of welcome bonuses, then combine their accounts to pool their rewards points.
“For instance, if you’re interested in travel rewards, perhaps one of you applies for Chase Sapphire Preferred while the other applies for Chase Freedom,” Lowery said. “Both cards earn rewards in the form of Chase Ultimate Rewards points, so you can then combine your earnings under a single account.”
Additionally, people with less-than-stellar credit can begin to build their credit score by being added to a well-qualified partner’s account.
A shield from capital gains taxes
When you sell a house, you pay taxes on the profits from the sale. If you’re married, you have more of a shield against how much you’re required to shell out to the government.
“Being married while selling a home that has appreciated in value can be the difference between paying thousands of dollars in taxes and walking away from the closing without Uncle Sam tapping your shoulder to ask for his cut,” Adams said.
Married couples can exclude up to $US500,000 of gains realised on their residence from taxation if they have lived in the property for at least two of the last five years. Filers who are single or married filing separately can only exclude $US250,000 of gains.
Lower living expenses
When you say ‘I do,’ you reap the benefits of an economic concept known as the economy of scale. The concept says that as the scale of an operation increases, the cost per item decreases.
Think of your household like a business operation. If you combine it with your partner’s, expenses that were once shouldered by both parties – rent, utilities, household staples like dish soap – are shared, and thus become less costly per person.
More affordable insurance
One of the major financial benefits of getting hitched is broadening your healthcare options. If one partner is self-employed or doesn’t work outside the home, he or she may be able to secure much more affordable coverage through their spouse’s employer than on the open market.
Leslie Tayne, a financial attorney, said that even when both partners have employer-sponsored coverage, one is likely better or more affordable than the other.
“If both partners work for employers that offer health insurance, you’ll have more choices and can find the option that suits your family best and is most cost-effective,” Tayne said.
And the benefits extend beyond health insurance. On average, married couples spend 6% less per year on car insurance. Homeowners insurance can be cheaper for couples, too.
Additional retirement benefits
For those who get married later in life, combining finances can be more complicated since each party brings several decades’ worth of financial considerations to the relationship. Luckily, Tayne said, marriage comes with many monetary benefits for people of retirement age.
“You can opt to collect a Social Security payment equal to 50% of your spouse’s payout in place of yours, even if it’s more than you would be receiving on your own,” she said. “You can also delay collecting your own benefits and collect the spousal payment to maximise your own payout.”
If one spouse qualifies for free Medicare Part A coverage and the other does not, the non-qualified spouse may be able to use the other’s Medicare Part A benefits. Once you’ve been married for a year, you’re also entitled to other spousal benefits like disability and survivor benefits.
Greater career flexibility
With two people contributing resources to the household, more options are on the table when it comes to each partner’s career.
Let’s say you’re unhappy with your job. Relationship therapist Diane Strachowski said being married may give you more flexibility to go to back to school or change careers thanks to the cushion of your partner’s income. The same goes for starting a family.
“You can decide which partner has the better earning capacity and who is a best fit for staying home or working part time,” Starchowski said.
“As a married couple you can take turns as well. Say one person is focused on their career. Once their career is launched, the other can then have a turn. Being married offers more flexibility as a distinct advantage.”
Not all money-related reasons for getting married are strictly about dollars and cents. Strachowski said there’s a psychological component that comes into play when you feel financially secure in your marriage.
“Married people often feel more responsibility because someone is relying on them, but they also feel more support,” Strachowski said. “As a result, you are more willing to take risks in your career and with your finances.”
That might translate into the confidence to ask for a raise you deserve or start the new business you’ve been dreaming of.
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