Financial Pros/Cons of being Married/Single in Retirement

[ER Eddie]

Quote:

Originally Posted by Johanson This is what I'm looking for...the exact breaks married or single people get. Looking at the differences in tax brackets alone, two single people making $90K per year each, pay a lot less in taxes than a married couple making $180K together. But, two single people making $35K each pay the same tax as a married couple making $70K together. I didn't factor in their standard deductions but I don't think that changes the rates. 2017 Tax Brackets | Tax Foundation

Well, here are a couple articles on the subject, from the author I mentioned, Bella dePaulo:

8 Ways Singles Pay More on Tax Day -- And Every Other Day, Too | The Huffington Post

21 Ways Single People Are Taxed More Than Married People on Tax Day and Every Other Day | Single at Heart

[exnavynuke]

Quote:

Originally Posted by Bigdawg She could go to court to prove "common law" marriage and get his SS.

Common law marriage is no longer a thing in most states now from what I've heard.

[karen1972]

As indicated previously it depends on unique situations. The only real tax issues I have seen is the inheritance tax you could be hit with. If you are both equal then the tax benefits greatly diminish.

However, if your not equal, then there can be some great advantages, everything from being able to fund both you and your SOs ROTH from a single income, being able to take the other spouses SS, being able to combine income and average down your tax bracket.

Right now I'm not married. We have been together 7 years, bought a house w/ joint survivorship. First 5 years I was in a high tax bracket and he was in the 15% tax bracket, no reason to combine and make him pay more for every dollar he made. Now he makes more and I'm retired, but it would be even worse, as right now we are both in the 15% tax bracket, but combining we'd be pushed out and I'd lose my ACA subsidy and have to pay taxes on my dividends.

However, once he stops working (within the next 5 years), then we will likely get married as then we would be living on only my money until we hit 65...as then as a couple, we could convert more of my 401k into a ROTH (since his is almost all ROTH now) and be able to take more money out to live on without pushing out of the 15% tax bracket. It is also likely given his lower lifetime earnings, he will be taking my SS.

Last year I think I figured getting married would cost me $6K in taxes. Thats pretty expensive for a piece of paper and more than I'd have to pay in writing a health directive and such to give us the same legal rights as married people. However, I know once we are both early retired, then marriage is definetly to our benefit.

[ABQ2015]

Quote:

Originally Posted by Johanson This is what I'm looking for...the exact breaks married or single people get. Looking at the differences in tax brackets alone, two single people making $90K per year each, pay a lot less in taxes than a married couple making $180K together. But, two single people making $35K each pay the same tax as a married couple making $70K together. I didn't factor in their standard deductions but I don't think that changes the rates. 2017 Tax Brackets | Tax Foundation

Your question concerned financial pros/cons in retirement. Most married couples are not going to exceed $153K (threshold for 28% tax bracket) in retirement income that is fully taxable. Those with this level of resources are likely to have taxable investments or other tax friendly investments. Many of the posters have brought up good points on second marriages with children from first marriages.

If that is not the case, what I would consider pros of marriage besides the economics of scale in maintaining one household and the various discounts available to families would be pension and social security survivor benefits, IRA inheritance rules more favorable for spouses, being able to be involved in health decisions of your spouse and decisions upon their death, being on their employer health insurance if offered in retirement, etc. For example, a spouse can still get social security survivor benefits while allowing their social security to grow until age 70. Also, when my boyfriend of ten years died, I had no standing with the coroner or the funeral home and all these communications were with the out of state cousin. You travel quite a bit. Your spouse could share in the travel rewards programs.

[Johanson]

Quote:

Originally Posted by ER Eddie Well, here are a couple articles on the subject, from the author I mentioned, Bella dePaulo: 8 Ways Singles Pay More on Tax Day -- And Every Other Day, Too | The Huffington Post 21 Ways Single People Are Taxed More Than Married People on Tax Day and Every Other Day | Single at Heart

I think this is a poorly written article.

1. Social Security. I'll give her that a married couple can draw on one another's SS but I don't see that being a huge plus.

2. IRAs. "IRAs are better in some ways than Social Security with regard to treatment of single people, but there are still some special penalties aimed solely at single savers."

What might these special penalties be? Anyone?

3. Health. I average about $250/year on my health not counting the $150/month I pay for insurance. I'm not buying that. It might be more expensive for a woman though.

4. Housing. I'll give her that one. I could get a renter and rent part of my house but I prefer not to do that.

5. Income tax. I call BS on this from looking at the tax tables. Married couple rates are either the same or more than singles.

6. Paid less. Not me! There is one other person that does my job and he is married and I make more. In fact, my versatility is considered a huge benefit to my boss.

7. Discounts. This is negligible, in my opinion.

8. Wedding Gifts. LOL, I haven't been to a wedding in years and have probably given only 2 or 3 wedding gifts and 0 shower gifts in my lifetime. She needs to do better than this.

[ER Eddie]

Ok. I'm not a financial expert or tax guy, so I'm in no position to defend what she's saying (she's not a financial person either -- she's coming at this from a sociological point of view). I give her credence, but she's clearly trying to make a point and is probably padding her case a bit. She gets a little too much into the "victim" mentality sometimes, which bugs me, but otherwise I find her very enlightening, if a bit too research-heavy at times. The other article has 21 points rather than 8, fwiw, so you might find more there. Or you might check out the paper by the person who worked at the Dept. of Treasury, which she cites as support or the other articles linked there.

Anyhow, I was just passing along what I knew, because it seemed to touch on the subject being raised here. I haven't read or analyzed each point myself -- as a single person, they just depress me, lol -- but I thought you might find them useful.

Guess not! Just disregard, then.

[rodi]

Quote:

Originally Posted by Bamaman #1 would be income taxes are cheaper on married filing together.

This is not necessarily true. If both people have decent income, there is a marriage penalty (more taxes) vs 2 single filers. It's best to run it through a calculator. If one person has significantly higher income, it typically is cheaper to be married.

Marriage Bonus and Penalty Tax Calculator | Tax Policy Center

Some pensions, alimony, etc get impacted if you remarry following the death of a spouse. Other benefits might increase.

My dad received survivor benefits of my mothers pension after she died. My step mom received SS on her deceased 1st husbands record since it was higher than her own record. If they'd married they would have lost about $3k/month. But they wanted the legal rights that convey when you're married - right to make medical decisions for each other, easier ability to jointly own property, etc... CA had a domestic partnership that fit the bill for them.

I used to joke that they were shacked up... but it made *total* financial sense for them not to get married. She's still family in my books.

[Johanson]

Quote:

Originally Posted by ER Eddie Ok. I'm not a financial expert or tax guy, so I'm in no position to defend what she's saying (she's not a financial person either -- she's coming at this from a sociological point of view). I give her credence, but she's clearly trying to make a point and is probably padding her case a bit. She gets a little too much into the "victim" mentality sometimes, which bugs me, but otherwise I find her very enlightening, if a bit too research-heavy at times. The other article has 21 points rather than 8, fwiw, so you might find more there. Or you might check out the paper by the person who worked at the Dept. of Treasury, which she cites as support or the other articles linked there. Anyhow, I was just passing along what I knew, because it seemed to touch on the subject being raised here. I haven't read or analyzed each point myself -- as a single person, they just depress me, lol -- but I thought you might find them useful. Guess not! Just disregard, then.

I sincerely appreciate the post! I'm looking for pure financial pros and cons to being married but any social/familial input is also appreciated. Her best point, IMO, is the SS aspects of being married. Being able to draw off of someone else's SS has to be huge.

I'm also beginning to think that marriage is far more beneficial financially for a person who has earned and/or makes far less than their spouse. I know when I was married, I made way more than my wife. After the divorce, I seemed to be far better off than when I was married, at least at tax time. I went from having to pay in at the end of the year to getting thousands back. Plus, I had more money in my pocket at the end of every pay period.

[Sunset]

Quote:

Originally Posted by gerntz What's the marriage tax penalty then?

Married couple can only claim $3,000 loss carried forward, but 2 single folks living together can claim $3,000 + $3,000 = $6,000

[kaudrey]

It definitely depends. One reason my aunt and "uncle" never married was that they met later in life and the taxes would have been worse if they were MJF. They spent 30 wonderful years together until he passed away in October....

[athena53]

Quote:

Originally Posted by W2R As a single person living next door to my SO, I do not share money with him or anyone. I spend a lot less because there is no urgency to spend the money before it is gone. I think that would be true if we lived together also, as long as we did not share our money and expenses, and each paid our share of expenses separately. Not sharing money has the added benefit of eliminating a lot of discord. I really don't care what he spends his money on since it isn't my money.

DH and I kept our finances separate. His tastes were extremely modest (my Ex was more like yours) but I was just more comfortable having my own accounts. It worked for us.

Having said that- I know we were hurt on the taxes when we married. I was 50 and working FT, he was 65 and started collecting SS. He had no other income but 85% of his SS was taxed because of the level of our combined incomes. He lost out on some state tax breaks, too, that he would have gotten if he'd been single. One year the taxation of SS added $7,000 between state and Federal.

DH died late least year and I am NOT looking forward to paying taxes for 2017 as a Single. I'm gonna get killed. I likely will not remarry, though. At this age (almost 64), I could have all but a sliver of my own assets tapped to pay for long-term care for a husband who doesn't have assets of his own for LTC. Even without LTC, there are other bad scenarios. In DH's last weeks I couldn't go out of the house for too long because there was a risk he'd fall getting out of bed or trying to walk with a cane (happened several times while I was right there). I used a home healthcare agency who sent wonderful people to stay with him but it was $22/hour. Not covered by Medicare, not tax-deductible. I got off easy. Months or years of that type of care could take its toll.

[socca]

Quote:

Originally Posted by athena53 I likely will not remarry, though. At this age (almost 64), I could have all but a sliver of my own assets tapped to pay for long-term care for a husband who doesn't have assets of his own for LTC.

I tried to fix up my then-100 year old grandmother with a then-105 year old guy living nearby. She spat out in disgust, "He's just looking for someone to take care of him." I didn't try that again. 😍

[kgtest]

divorce and heir are the real factors.

If married then divorce could impact more.
If married then divorce could impact heirs


In my situation I ran the numbers it was maybe $1000 tax difference on a $100,000 salary... <1% hit a year but IMHO but that is not constant and tax laws could change.

Alimony and SSA are impacted with/without marriage.

[jkern]

I just got married last year and for us we will pay a little more being married than if we were single. Also, if a few years we will be paying a lot more being married because if I were single my SS would not be taxed until age 70.