Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Financial Pros/Cons of being Married/Single in Retirement
Old 01-16-2017, 06:16 PM   #1
Recycles dryer sheets
 
Join Date: Aug 2016
Location: Cottage Grove
Posts: 212
Financial Pros/Cons of being Married/Single in Retirement

Hypothetically, we have a couple very much in love and living together and they will continue to do so until the day one of them dies. Would it be better for them financially to be married or single? I realize that different lifetime income levels would factor in but lets assume they were always within 10-20% of each other's incomes. Where do they win and where do they lose for being married?
__________________

Johanson is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-16-2017, 08:25 PM   #2
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Location: Huntsville, AL/Helen, GA
Posts: 3,992
#1 would be income taxes are cheaper on married filing together.
Often, spouses will have income from a previous spouse that may be discontinued when they get married--as in alimony. Or other income sources may cease when they get married, and I've seen long term cohabitation in those circumstances.

My friend has a mother that lived with a boyfriend for 25 years, and she had a low income job. He died, and she was literally put out in the streets with little social security and no pension to live on. Now, the lady's wheel chair bound and my friend's going to have to move her into her house and provide 24 hour care. It's just not fair that the man she took care of left her with nothing. It's not uncommon, unfortunately. She has no funds to get into a nursing home.
__________________

Bamaman is offline   Reply With Quote
Old 01-16-2017, 08:37 PM   #3
Thinks s/he gets paid by the post
Souschef's Avatar
 
Join Date: Dec 2015
Location: Santa Paula
Posts: 2,697
Here is our story: Both our spouses passed away in 2005. In 2006 we were both single and the income taxes killed me. My wife had no income other than her husband's SS and a small survivor's pension.
We married in late 2007, and since she was over 60 she did not lose his SS or her pension. Even combining all that, MFJ was a lots less expensive, taxwise.
__________________
Retired Jan 2009 Have not looked back.
AA 50/45/5 considering SS and pensions a SP annuity
WR 2% with 2SS & 2 Pensions
Souschef is online now   Reply With Quote
Old 01-16-2017, 08:42 PM   #4
Thinks s/he gets paid by the post
 
Join Date: Mar 2004
Posts: 3,022
I'm single, so am only guessing. Although it seems as though many financial things are more favorable for married folks

Would they be able to collect on each other's SS? (If either were married previously, they may get a better deal claiming on spouse #1 SS).

Would they be able to file taxes MFJ?

Aren't married (MFJ) folk's tax brackets higher, thus allowing them to take advantage of Roth conversions, etc.?

If either are pension-eligible, are they able to leave their pension (Or a %-age thereof) to the spouse, if married?

Are either of them getting employer-provided healthcare for which the other one would become eligible, if married?

omni
omni550 is offline   Reply With Quote
Old 01-16-2017, 08:55 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
calmloki's Avatar
 
Join Date: Jan 2007
Location: Independence
Posts: 6,180
Long term unmarried couple here. Pretty much everything we own is titled joint with right of survivorship, so no concern about a survivor being tossed to the curb. Paltry SS benefits, no pensions. I thought we had the better tax status, maybe I'm wrong. One itemizes and the other takes standard deduction. We adjust our incomes by having one or the other declare interest income from loans and try to make SS cutoffs work for us, but don't go crazy. Enough income comes in we can be sloppy.
calmloki is offline   Reply With Quote
Old 01-16-2017, 10:00 PM   #6
Recycles dryer sheets
 
Join Date: Aug 2016
Location: Cottage Grove
Posts: 212
In my hypothetical, both people have earned about the same amount of money throughout their lives before they retired and I'm assuming they have about the same amount of savings.
Johanson is offline   Reply With Quote
Old 01-16-2017, 10:03 PM   #7
Thinks s/he gets paid by the post
 
Join Date: Apr 2011
Posts: 2,738
What's the marriage tax penalty then?
gerntz is offline   Reply With Quote
Old 01-16-2017, 10:16 PM   #8
Thinks s/he gets paid by the post
2017ish's Avatar
 
Join Date: Apr 2012
Location: Nashville
Posts: 1,865
Not so much "they," but are either of them over the estate tax exclusion limit? Their heirs may care.
__________________
OMY * 3 2ish Done 7.28.17
2017ish is offline   Reply With Quote
Old 01-16-2017, 10:18 PM   #9
Recycles dryer sheets
 
Join Date: Aug 2016
Location: Cottage Grove
Posts: 212
Quote:
Originally Posted by 2017ish View Post
Not so much "they," but are either of them over the estate tax exclusion limit? Their heirs may care.
Good question. Will it matter if they are married or not?
Johanson is offline   Reply With Quote
Old 01-17-2017, 07:27 AM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 9,619
I suspect the financials would vary enormously depending on the specifics. If DW was to die I doubt the tax implications would be my primary consideration in a decision to marry or not. My inclination would be to avoid marriage for a variety of reasons but if I got several years into living together I would at least look into the financial benefits of both approaches. If I ever chose marriage I would be very careful with prenups and trusts. The main advantage I could see would be leaving my Fed pension survivor annuity to a new significant other. Maybe I could sell it .
__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff is online now   Reply With Quote
Old 01-17-2017, 09:17 AM   #11
Thinks s/he gets paid by the post
 
Join Date: Mar 2015
Location: Winnipeg
Posts: 2,566
Quote:
Originally Posted by gerntz View Post
What's the marriage tax penalty then?
Is there one? I may be wrong, but as far as I know, there is no tax advantage to being single. In fact, they are penalized because couples and families enjoy some tax advantages that are unavailable to single people. Single people also can't designate a spousal equivalent for SS, but they contribute at the same rate as married people.
Music Lover is offline   Reply With Quote
Old 01-17-2017, 09:28 AM   #12
Thinks s/he gets paid by the post
2017ish's Avatar
 
Join Date: Apr 2012
Location: Nashville
Posts: 1,865
Quote:
Originally Posted by Music Lover View Post
Is there one? I may be wrong, but as far as I know, there is no tax advantage to being single. In fact, they are penalized because couples and families enjoy some tax advantages that are unavailable to single people. Single people also can't designate a spousal equivalent for SS, but they contribute at the same rate as married people.
Yes. For example, two individuals with relatively similar incomes are indeed tax penalized if they marry. On balance, the Code and other laws favor marrieds, but there are many exceptions. (We've been in this situation for a long time; tried to get DW to agree to a paper divorce in 1992, but she didn't want to go there.)

Middle son and his partner are in holding pattern (after starting relationship at 19) because they both are high wage earners. Tax hit would be noticeable. Eldest and his wife ran spreadsheets and found only a .2% penalty so they got married ....
__________________
OMY * 3 2ish Done 7.28.17
2017ish is offline   Reply With Quote
Old 01-17-2017, 09:32 AM   #13
Thinks s/he gets paid by the post
2017ish's Avatar
 
Join Date: Apr 2012
Location: Nashville
Posts: 1,865
Quote:
Originally Posted by Johanson View Post
Quote:
Quote:
Originally Posted by 2017ish View Post
Not so much "they," but are either of them over the estate tax exclusion limit? Their heirs may care.
Good question. Will it matter if they are married or not?
If one (but not both) is over the estate tax exclusion, marriage would enable them to set up an estate plan to use the portability provisions to exclude a bit more than 10,000,000, rather than a bit more than 5,000,000, from estate taxation. So it would matter, and could benefit the heirs.

If they are both over, they probably are already consulting with estate planning counsel.
__________________
OMY * 3 2ish Done 7.28.17
2017ish is offline   Reply With Quote
Old 01-17-2017, 09:40 AM   #14
Thinks s/he gets paid by the post
ER Eddie's Avatar
 
Join Date: Mar 2013
Posts: 1,316
Married people get all kinds of financial breaks that singles don't. I don't have a list, but there are plenty; I read about them in a book called Singled Out.

However, single people get to make their own financial decisions. To me personally, that's more important than any financial advantages.
ER Eddie is offline   Reply With Quote
Old 01-17-2017, 10:18 AM   #15
Full time employment: Posting here.
 
Join Date: Oct 2014
Posts: 746
Quote:
Originally Posted by Bamaman View Post
My friend has a mother that lived with a boyfriend for 25 years, and she had a low income job. He died, and she was literally put out in the streets with little social security and no pension to live on. Now, the lady's wheel chair bound and my friend's going to have to move her into her house and provide 24 hour care. It's just not fair that the man she took care of left her with nothing. It's not uncommon, unfortunately. She has no funds to get into a nursing home.
She could go to court to prove "common law" marriage and get his SS.
__________________
-Big Dawg-FI since 9/2010. Failed ER in 2015. New target 2020.-

-"Blow that dough"-Robbie

" People say I'm lazy, dreaming my life away Well, they give me all kinds of advice designed to enlighten me When I tell them that I'm doing fine watching shadows on the wall "Don't you miss the big time, boy. You're no longer on the ball" -John Lennon-
Bigdawg is offline   Reply With Quote
Old 01-17-2017, 10:28 AM   #16
Full time employment: Posting here.
 
Join Date: Apr 2013
Location: Beach and Mountain
Posts: 539
I am going to assume a second marriage. I am going to assume they have wills that leave everything to each other upon passing. I am going to assume there were kids in each 1st marriage. Second to pass always finds some way to hate/alienate kids from deceased spouses first marriage. Therefore, those kids get nothing from will of second to pass.

Yes, this can also happen with an unmarried couple, but married couples tend to mix those finances. In either case, this is a problem with small estates. Larger estates, not so much. And yes, this is a common set of assumptions.

Hence, one more situation where single (and separate finances) is better.
Z3Dreamer is offline   Reply With Quote
Old 01-17-2017, 10:38 AM   #17
Thinks s/he gets paid by the post
Hyperborea's Avatar
 
Join Date: Sep 2002
Location: Silicon Valley
Posts: 1,008
There are probably some non-direct tax issues with staying single but joining your lives as a couple. I've heard about these from gay couples that I know though for them some of this is in the past since they can now marry. If you know a gay couple they might be the best source of getting this setup right.

There are difficulties when commingling your assets. One is gift tax issues if you buy property or other large items together but one of the parties puts up the money or more of it. If you want it to be equally owned then the one that put up more of the money has to gift to the other the remaining share. For example, buy a $200,000 house and one party pays for it all. They would then need to gift the other party $100,000 of house. That will take a number of years at $14,000 per year or you can use up some of your estate tax limit and do it all in one year.

You may run into issues of not being related and the hassles that can cause with financial issues, medical and hospitals, insurance, and a lot of other places. You might not be able to visit or see the person or deal with issues in their place. You can apparently set it up to work like marriage (but not completely) at some expense. Even then somebody on the front line can decide to ignore your setup causing you to have to spend more time and effort to deal with that rather than the issues at hand. Also, your setup may not have legal force in all states or countries.
Hyperborea is offline   Reply With Quote
Sharing money
Old 01-17-2017, 10:49 AM   #18
Moderator Emeritus
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 43,107
Sharing money

Quote:
Originally Posted by Johanson View Post
Hypothetically, we have a couple very much in love and living together and they will continue to do so until the day one of them dies. Would it be better for them financially to be married or single? I realize that different lifetime income levels would factor in but lets assume they were always within 10-20% of each other's incomes. Where do they win and where do they lose for being married?
Honestly, I think this depends SO much on the individual couple and the financial aspects of their marriage agreement. Will they share money and expenses when married, but not when single? I think this what makes the biggest difference.

When I was married, we shared money with joint bank accounts and credit cards and so on. I guess most people do. My ex like to spend as much we had plus as much as we could borrow. So I'd buy things whenever there was money in the bank or on the credit card to be spent, because if I didn't it would be gone.

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.
__________________
I have drunken deep of joy,
And I will taste no other wine tonight.

― Percy Bysshe Shelley
W2R is online now   Reply With Quote
Old 01-17-2017, 10:53 AM   #19
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Amethyst's Avatar
 
Join Date: Dec 2008
Posts: 8,073
Or vice versa. Everybody demonizes step-parents, but I've seen one case where the step-kids did the alienating while the first parent was still living; and were rewarded by being cut out of that parent's will. In that case, the stepkids all but demanded their parent get divorced because they didn't like the step-parent; on refusal, they cut off all relations with the couple, cut them for 30+ years, but apparently stalked both parties online to learn when one of them died...

Either way, your point is taken.

Quote:
Originally Posted by Z3Dreamer View Post
Second to pass always finds some way to hate/alienate kids from deceased spouses first marriage. Therefore, those kids get nothing from will of second to pass.

r.
__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success to be able to spend your life in your own way. Christopher Morley.
It involved a mannequin hand, and an electric shaver taped to a golf club! - "The Other Guys"
Amethyst is offline   Reply With Quote
Old 01-17-2017, 01:29 PM   #20
Recycles dryer sheets
 
Join Date: Aug 2016
Location: Cottage Grove
Posts: 212
Quote:
Originally Posted by ER Eddie View Post
Married people get all kinds of financial breaks that singles don't. I don't have a list, but there are plenty; I read about them in a book called Singled Out.

However, single people get to make their own financial decisions. To me personally, that's more important than any financial advantages.
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
__________________

Johanson is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Motorhome purchase? Pros/Cons! greenhm Life after FIRE 223 07-27-2008 04:49 PM
after-tax contributions to 401K - pros/cons? simple girl FIRE and Money 14 10-12-2006 02:27 PM
Index Funds Pros and Cons Pale Rider FIRE and Money 91 09-29-2006 11:38 AM

» Quick Links

 
All times are GMT -6. The time now is 02:56 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2020, vBulletin Solutions, Inc.
×