It may be just a piece of paper, but for many of us, it’s a piece of paper that comes with substantial financial benefits. Trust me. When LGBTQ activists began their fight for same-sex marriage, it wasn’t just about love.
Studies show people who get married, and stay married, have about twice the wealth of their single counterparts. Together, a couple’s wealth is, on average, four times that of a single person’s. And the longer the marriage, that bigger the financial accumulations.
A disproportionate number of people within the LGBTQ community live in poverty. There are a lot of contributing factors. One is that until recently we couldn’t take advantage of the significant financial benefits of marriage. This becomes especially true as we grow older.
Some of the biggest benefits center around retirement, taxes, and legal financial incentives.
Social Security Benefits
If you’re married, you’re entitled to spousal benefits after your spouse retires, after your spouse dies, and if your spouse becomes disabled. This can be a significant retirement benefit for the rest of your life. And benefits are available to you even if you never worked, as long as your spouse accumulated a long enough work history to qualify for disability or retirement benefits.
Typically, you’re entitled to receive up to 50 percent of whatever amount your spouse received. Survivor’s benefits are even larger, with the potential to receive as much as 100 percent of your spouse’s benefits at full retirement age.
Given most of us now save for retirement through IRAs or similar plans, benefits that come with marriage can really add up. If you’re married, you can roll over a deceased spouse’s IRA into your own. This means you won’t have to cash out early and you’ll have more security going into retirement. Spouses who don’t work are also allowed to contribute to their working spouse’s IRA for retirement savings.
If your spouse has a pension, you are entitled to continue receiving it after your spouse dies, if they elected to have survivor’s benefits. Pension benefits are especially good if your spouse was in the military, worked for the government, or held a union job.
If you’re married, your spouse’s entire estate will pass to you completely tax-free. Federal exemptions are rather high, so for most people, federal taxes won’t have to be paid on inheritance regardless of your marital status. But the tax exemptions are low enough in some states that even moderate estates will be taxed if you’re not married.
You’ll qualify for the gift tax marital deduction as long as your spouse is a U.S. citizen. That means you can make tax-free gifts in any amount.
Filing joint taxes can also save you a lot of money, especially if one spouse works and the other doesn’t. But do your homework before filing to make sure a joint return will save you money. This is especially important now, with the major tax overhauls coming this year.
The most obvious insurance savings for married couples are in health care. Plans for married couples are usually cheaper than individual plans, even if it’s through an employer. If you’re not employed, or if you’re self-employed, being married to someone with a work-based insurance plan can save you thousands of dollars.
Combining other insurance can also save you a lot of money. Consumer Reports found most car insurance companies offer a multi-car discount and reduced rates for married couples. Their 2017 analysis found two 30-somethings who combined their car insurance policies after marriage saved an average of $525 a year.
This may sound obvious, but the fact is it’s cheaper to combine living expenses. One rent or mortgage payment, one utility bill, and shared meals all add up. And while you may think the savings would be the same whether you’re married or not, research shows that is usually not the case. One study out of Ohio State University found married people are far more financially secure than single people, even when the single people studied lived with significant others. The predominant theory is that married people are more committed to combining and sharing their resources because they’re committed to the idea of being together forever.
Studies also show the longer you’re married, the greater your wealth compared to single people. Often one spouse is able to climb the corporate ladder because the other is willing to spend more time at home taking care of family. This means higher salaries. Married couples are also more likely to plan ahead for a future together, and census figures show married couples end up with significantly higher savings at retirement age.
One thing to keep in mind, these same studies show divorce is one of the biggest financial blows a person can take. People who have been divorced have, on average, less wealth than their married and never-married counterparts. If you don’t get married, you can’t get divorced. However, if you’re looking for long-term financial gain, the best route is a long-term marriage.