Should I say "I Do" or "I Don't"

Many couples are waiting longer to get married or are debating whether they should say “I do” for a second time. A decision to get married or not should not just be about money, but it is something to consider. When looking at finances and how to merge two lives together there can be advantages and disadvantages that could include:

1.      Health Insurance: Health insurance is one of the reasons people do not retire early due to the fact that it is so expensive. Every month the best place to get health insurance is through your employer but maybe they don’t offer it or you own your own business.  If one of you doesn’t have health insurance through your employer, getting married could save you money. The age of 65 is when you are able to apply for Medicare. Before 65, if your significant other doesn’t have a group health insurance option it could be less expensive to get married and have his/her on your group plan if that is an option.

2.      Pension: If you have a retirement plan that is set to give you a certain amount every month in income once you retire (like Social Security) it might be smart to get married. Generally, a non-relative cannot be a beneficiary of a pension. So, if you have a pension plan and are not married and you pass away that money is forfeited. If you got married you could add your significant other as a beneficiary so they could continue the income payments every month in the event of your passing. Now if you were planning on taking the lump sum and are able to and want the money to go to your kids then that is not a reason to not tie the knot. You could possibly take the pension lump sum and roll it into an IRA and then you can list whoever you want as your beneficiary.

3.      Income Tax: With all of the tax law changes, the marriage penalty basically disappeared. So now you could possibly be in a lower income tax bracket if you were to get married. But these are the current income tax brackets and those tax laws can change at any time. In my opinion, this is the one piece that is the biggest difference financially in getting married or not.

4.      Roth IRA: This is an individual retirement account allowing a person to set aside after-tax income up to a specified amount each year.  There are income limits on the Roth IRA ($135,000 for single filers and $199,000 for married). You may qualify as a single person but if you get married, you may not qualify.

5.      Estate Planning/Beneficiaries/Title of Assets: If you have an account in your own name without a beneficiary and you are not married and do not have a will, this money will go into probate. It will also depend on the state you live in. Minnesota is a no-fault state and from the day you get married until the day you get divorced everything in between is marital property with the exception of inheritance or money that was given to you. Estate planning is imperative for any person but even more important for a non-married couple. You do not have to be married to own property together. You can buy a house together and title it in both of your names. You can also get a mortgage in both of your names, but what if you move into her house and the house is in her name only? This is why estate planning is so important and having a financial plan together is so valuable. If you don’t want to get married this is where a cohabitation agreement could be useful and beneficial for your relationship.

The question remains, is it best to get married or live as domestic partners? The answer is not clear for everyone. We recommend setting up a meeting with your Wealth Advisor and your CPA to determine which option is the best for you and your financial situation. To coordinate a time to meet with one of our Wealth Advisors, contact us at 763-231-9510.

Any opinions are those of Nicole Middendorf and not necessarily those of RJFS or Raymond James.

Expressions of opinion are as of this date and are subject to change without notice.

This information is not intended as a solicitation or an offer to buy or sell any security referred to herein.

Investments mentioned may not be suitable for all investors.

You should discuss any tax or legal matters with the appropriate professional.