Marriage has been part of human culture for thousands of years. In the past, it was largely an exchange of people and property. Since then, it’s evolved into a celebration of two lovers, a union of people who want to combine lives – and finances.
Although marriage is no longer based primarily on economics, it still holds legal and economic consequences.
Some couples find that marriage isn’t all it’s cracked up to be. But for many, the perks outweigh the downsides.
Perhaps the biggest benefit of marriage is the general increase in financial security. While you may pay more for groceries or take on another auto loan, you can still split your housing, utility, and entertainment costs. Plus, having two incomes makes it easier to accumulate real estate and retirement savings.
Tax benefits aren’t the only reason to marry – but they do help.
In the United States, married couples can enjoy more or higher tax deductions, which reduce the income they have to pay taxes on. Deductions can apply for having dependent children, buying a house together, or paying mortgage interest. Plus, filing a joint tax return lets you combine the individual standard tax deductions, even if one spouse doesn’t have income.
Another perk of marriage is combining various work and government-related benefits. For instance, if your partner’s work offers health insurance, you can often get free coverage or buy into their health plan. Plus, spouses can qualify for spousal Social Security benefits even if they’ve never worked.
Usually, you can’t open an individual retirement account (IRA) unless you have earned income. But if you’re married, you can open a spousal IRA to make contributions on behalf of a non-working spouse. Saving using an IRA is a great way to double your tax-deferred savings!
Marriage provides unique benefits when your spouse passes away. To start, the inheritance left to spouses usually transfers tax-free. In addition, widowed spouses are often entitled to their partners’ Social Security benefits, which can help ensure a more comfortable life.
Despite these benefits, marriage also holds financial downsides for some couples.
It’s true that marriage comes with unique tax benefits. But you may also have to worry about the infamous “marriage penalty.” Essentially, if two similar-income couples file taxes jointly, pooling their income can push them into a higher tax bracket. But if you file separately, you may lose your increased deductions.
When you marry, many states consider your spouse’s debts your own. That means if your spouse has a gambling addiction, lots of debt, or poor spending habits, you may be on the hook financially.
It’s said that 50% of marriages end in divorce, though that varies by demographic. Regardless of how often it happens, if you do divorce, you may be on the hook for paying your ex-spouse alimony or child support. If you had joint assets from marriage, you might also have to sell or split them, which can be a bitter, drawn-out process.
Marriage can offer legal and financial advantages to being single. Of course, getting married isn’t just a financial decision, but it’s better to be aware and prepared!
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