Why You Should Not Get Married (Financial Speaking)

Let me clarify one thing right off the bat…I’m all for the institution of marriage.  If you fall in love with someone, you should be able to enter in to a marriage and aim for a lifetime of happiness.

Marriage

That being said, absent the romanticism and committing yourself to the person you love for the rest of your life, marriage is really little more than a legal agreement.  As with many legal agreements, there are sometimes unintended consequences of entering into the agreement and marriage is certainly no different.

Those who are married enjoy advantages that unmarried folks do not such as tax benefits and credits but there are some cases in which the unhitched hold the upper hand.  The story of Rachelle Friedman recently made the news and makes the case in point.  Friedman suffered a freak accident at her bachelorette party and became paralyzed from the waist down.  She was also scheduled, up until the accident occurred, to get married in June.  Those plans are now being postponed but not because her fiancé is getting cold feet.  The real reason is because Friedman’s medical bills are currently being covered by Medicaid.  Should she get married, her and her spouse’s combined incomes would leave them ineligible for coverage.  So, for now, they remain unmarried.

Medical issues and insurance coverage can be reasons for choosing to remain unmarried but they’re not the only ones.  Bypassing marriage will make the most sense for those that have something to lose by getting married – namely a regular income stream.

If you’re receiving Social Security income courtesy of an ex-spouse and you get remarried, in many cases that income stream goes away.  As with many who need to carefully manage their finances, those who are considering remarrying need to assess if they can live without the extra money.

Social Security isn’t the only income from an ex-spouse that can influence your remarriage plans.  Alimony shares a lot of similarities to Social Security in that in many cases you can count on losing regular alimony payments if you get remarried.  Many states assert that you are no longer in need of spousal support once you gain a new spouse (although in many cases you can live unmarried with a partner without it affecting your alimony payments).

The choice of whether or not to get married can be especially hairy to those who’ve been previously married but it can also be an especially important decision to those who have children nearing college age.  Financial aid decisions are based on the parent with whom the child lived the longest during the prior year and a current spouse if applicable.  That means getting married just prior to Junior heading off to college could have serious ramifications to any government aid that could be received.  While this reason may not cause you to avoid marriage altogether, it’s certainly a reason to consider delaying it.

While the decision to marry should realistically be based solely on love and finding your soulmate, the business side of the decision necessitates thinking about the financial impact of it.  Once you understand all impacts, there’s no reason you can’t have happiness both personally and financially.

Photo credit: Justin Lucarelli

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Author Info

This post was written by David Dierking. David lives outside Milwaukee, Wisconsin and has been working in the financial services industry for over 13 years with a background in investments, accounting, and marketing. He earned his Chartered Financial Analyst designation from the CFA Institute in 2004 and was recently published in the Milwaukee Business Journal. You can also check him out at The Ultimate Fit Challenge

3 Responses to “Why You Should Not Get Married (Financial Speaking)”

  1. Todd |  Dec 09, 2010 at 6:06 pm

    I am curious but what are the tax benefits? If you look at the tax brackets, a married couple does not get to double the income to determine the bracket but rather it is a very small percentage while two people living together get the benefit of splitting living costs and being able to earn much more money while being in a lower tax bracket.

  2. Big-D |  Dec 10, 2010 at 10:09 am

    Why would a household get double the income because they are married? I have always hated that argument. You have a household, ie. a single house where two adults live. You don’t need two sets of furniture, two sets of appliances, two sets of pots and pans, etc. You need: 1) clothes and personal items 2) maybe a car if they work 3) a percentage increase in food intake (it is like .6 for each new mouth to feed). So at the end of the day, why do you need double the income to have two people in the house? The rest is gravy in terms of what people spend their money on. Personally I think you need to all pay the same tax rate, but the reason we don’t is because our good old government wants to make sure we all get married, have kids, own a house, etc. and that is why they give us tax credits because no one wants to pay more taxes than they have to.

    Just a little math for you. Lets say you have two consenting adults. I will go through a list of possible income spreads which will show you the tax burden for the married/single category for the entire household based on how they file (these are just randomish numbers, 25k is poverty, 40k is average American income, 65k is solid middle class, 150k is considered rich).
    1) If one person works and makes 25k, single: 3331.25, married: 2912.5.
    2) If one person works and makes 40k, single: 6181.25, married: 5162.5.
    3) If both people work and make 25k each, single: 6662.5, married: 6662.5.
    4) If both people work and make 40k each, single: 12362.5, married: 12362.5.
    5) If both people work and make 65k each, single: 24862.5, married: 24862.5.
    6) If one person works and makes 150k, single: 35709.25, married: 30243.5.

    What you see is being single is a heavier burden than being married (even though I did not account for deductions, exemptions, etc.) until you get into the middle class area. Once you are middle class it does not matter, until you are in the upper class area. So your example here of two people living together and splitting the living costs, is really not true. If you have a couple who lives together, they by default split the expenses, so that is not relevant. If you are talking of getting into a lower tax bracket, that just does not hold water. Look at married and single at the poverty line – they pay the exact same tax burden as the married people. The government designs it this way on purpose. They think that if it looks like it is better to be married, more people will do it, however you have to do the math to figure out if it makes sense for you.

    So to David’s point, If you are getting things like social security, alimony, financial aid for school, health insurance, etc. those are reasons to not be “married”. I know a couple that is not getting married as both of them have declared bankruptcy in the last 4 years. He did it 4 years ago when a medical illness wiped him out, and she did it as a single mother working for the state and her ex refused (and went to jail) for not paying child support and alimony. They love each other, live together, adopted each others kids, but won’t get married as she is getting unemployment while she goes back to school, if they get married they have a joint credit history and his will be fixed in 3 years and hers wont for another 6. So why ruin their “together” lives by filing a piece of paper saying they are married. They wear rings, tell each other they are married, just have not gone and done it official. Who cares but the government?