Author Topic: Married vs staying single  (Read 1792 times)

BradminOxt19

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Married vs staying single
« on: January 15, 2020, 12:18:48 PM »
I haven't studied this topic so hoping some fellow mustachians can provide some guidance.

My brother has been engaged to a nice girl for 5 years, but can never seem to pull the trigger on actually getting married.  No kids, just them two. No plans for kids for now (they seem to travel a lot and enjoy not having kids).

He makes around $175k per year as a dentist, she makes around $30k as a teacher.  She lives in an apartment with her sister, he has his own house.  She spends 95% of her time at his house though so she is helping with the apartment just to help her sister through graduate school.

From a tax perspective, and retirement perspective, is it better for them to get married?  I presume their average tax rate would go down as $200k income as a couple vs a single person at $175k and $30k respectively?

From a health insurance perspective I presume it is also cheaper? And retirement perspective could they contribute to Roth or HSA together and have higher contribution limits?

I've been married far too long to keep an eye on these things.   If you were in my brother's situation, would you get married (assuming this is THE girl for life), to reap potential tax / insurance / retirement benefits?
« Last Edit: January 15, 2020, 12:31:00 PM by BradminOxt19 »

terran

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Re: Married vs staying single
« Reply #1 on: January 15, 2020, 12:26:26 PM »
Yes, the tax code favors married couples with large income differences, and is slightly worse for couples with similar incomes.

YttriumNitrate

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Re: Married vs staying single
« Reply #2 on: January 15, 2020, 12:30:50 PM »
From a tax perspective, and retirement perspective, is it better for them to get married?  I presume their average tax rate would go down as $200k income as a couple is less than a single person at $175k and $30k respectively?

Based on the calculator from the following website, it looks like they would save about $4k in taxes by getting married.


https://tpc-marriage-calculator.urban.org/

BradminOxt19

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Re: Married vs staying single
« Reply #3 on: January 15, 2020, 12:35:08 PM »
From a tax perspective, and retirement perspective, is it better for them to get married?  I presume their average tax rate would go down as $200k income as a couple is less than a single person at $175k and $30k respectively?

Based on the calculator from the following website, it looks like they would save about $4k in taxes by getting married.


https://tpc-marriage-calculator.urban.org/
That is a neat tool!! Thanks!! I'll forward this to my brother to see if it's worth saving this money to get hitched permanently, hah!!

Anyone else with thoughts on the benefits from a Roth IRA / retirement / health insurance perspective?  And if they plan to have children, is it better to be married? 

Trying to get myself invited to a future wedding, LOL. (And my kids need to have cousins to play with!)

robartsd

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Re: Married vs staying single
« Reply #4 on: January 15, 2020, 01:03:50 PM »
No one can tell your brother what he should do. Assuming that they continue together for life sharing everything, yes marriage would provide significant financial benefits. Should something cause them to split up after marriage, your brother stands to have quite a financial loss (details may vary by where they live).

Trying to get myself invited to a future wedding, LOL. (And my kids need to have cousins to play with!)
Pressure to get married followed by pressure to have kids, will not win you points with any couple I know. He might outsource his taxes and not really be aware of the tax savings they would have, but I'd be careful about how to approach this.

LifeHappens

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Re: Married vs staying single
« Reply #5 on: January 15, 2020, 01:20:02 PM »
Trying to get myself invited to a future wedding, LOL. (And my kids need to have cousins to play with!)
Both these things are firmly in the "none of your business" column.

Fishindude

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Re: Married vs staying single
« Reply #6 on: January 15, 2020, 01:21:08 PM »
I'd say, don't rock the boat.
Sounds like he's got a good thing going.

BradminOxt19

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Re: Married vs staying single
« Reply #7 on: January 15, 2020, 01:59:47 PM »
Trying to get myself invited to a future wedding, LOL. (And my kids need to have cousins to play with!)
Both these things are firmly in the "none of your business" column.
Of course you'd be dead wrong since you know nothing about my brother and I.

We hang out a lot, and he has been asking me more and more about what it's like raising kids, and asking for my opinion if this is the girl for the rest of his life, since I know him the best and give him the most sound advice.

I don't get it when people post these unhelpful things knowing nothing about the personal relationships between siblings.

BradminOxt19

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Re: Married vs staying single
« Reply #8 on: January 15, 2020, 02:03:32 PM »
No one can tell your brother what he should do. Assuming that they continue together for life sharing everything, yes marriage would provide significant financial benefits. Should something cause them to split up after marriage, your brother stands to have quite a financial loss (details may vary by where they live).
Very good point about divorce.  I get a sense they would like to explore discussing having kids since she has a biological clock and he's not getting any younger.  So even without marriage, splitting up as single parents could have significant consequences. 

ixtap

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Re: Married vs staying single
« Reply #9 on: January 15, 2020, 02:09:19 PM »
Your brother can always do a backdoor Roth. He may even be able to insure his domestic partner. When we first hooked up, we found that DH, a young 20 something at the time, got better car insurance rates as my domestic partner. So much so that insurance for two for two cars was less than he had been paying on his own. When I followed him out of state, he was able to put me on his health insurance before we got married. As a matter of fact, it has been six years and we still haven't gotten around to getting an official copy of our marriage certificate, since HR hasn't requested it. I should do that.

Another thing that they could do without getting married is to arrange their finances so that each can maximize any work place savings plan.

The main benefits of marriage come in times of crisis. A spouse has privileges that a domestic partner does not, from hospital visiting to medical decisions to inheritance. Much of this can be addressed with legal documents that are much cheaper than your average wedding, though.

BradminOxt19

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Re: Married vs staying single
« Reply #10 on: January 15, 2020, 02:20:17 PM »
Your brother can always do a backdoor Roth. He may even be able to insure his domestic partner. When we first hooked up, we found that DH, a young 20 something at the time, got better car insurance rates as my domestic partner. So much so that insurance for two for two cars was less than he had been paying on his own. When I followed him out of state, he was able to put me on his health insurance before we got married. As a matter of fact, it has been six years and we still haven't gotten around to getting an official copy of our marriage certificate, since HR hasn't requested it. I should do that.

Another thing that they could do without getting married is to arrange their finances so that each can maximize any work place savings plan.

The main benefits of marriage come in times of crisis. A spouse has privileges that a domestic partner does not, from hospital visiting to medical decisions to inheritance. Much of this can be addressed with legal documents that are much cheaper than your average wedding, though.
Good points to consider.

One thing I do know about putting a non-spouse on health insurance - that portion of the cost is not pre-tax, so it will get taxed in payroll.  This came up with a friend of mine who added his partner to his insurance, the deductions were taken post-tax which surprised him until HR explained it to him.

nereo

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Re: Married vs staying single
« Reply #11 on: January 15, 2020, 02:29:14 PM »
He should check the laws about domestic partners for his state.  In many locations it will allow health coverage equal to a legal spouse, and often does not require any legal declaration (“de-facto”)
 
As others have mentioned, while his their collective tax situation may improve on net, her taxes may increase substantially as currently she’s likely paying little to no federal taxes.  And the liability of divorce is substantial for your brother.

I’m still not clear why marriage is a forgone conclusion here. My uncle has been with the same woman for 30 years - marriage does not guarantee permanence, nor does staying unmarried necessarily mean there’s a lack of commitment.  To each their own.

spartana

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Re: Married vs staying single
« Reply #12 on: January 15, 2020, 03:22:03 PM »
No one can tell your brother what he should do. Assuming that they continue together for life sharing everything, yes marriage would provide significant financial benefits. Should something cause them to split up after marriage, your brother stands to have quite a financial loss (details may vary by where they live).

Trying to get myself invited to a future wedding, LOL. (And my kids need to have cousins to play with!)
Pressure to get married followed by pressure to have kids, will not win you points with any couple I know. He might outsource his taxes and not really be aware of the tax savings they would have, but I'd be careful about how to approach this.
I agree with both of these statements. While the cost savings from taxes, health insurance and sharing a home can be huge, the amount of assets your brother has pre-marriage and likely much higher income could mean is would be financially at risk if divorce happens. Depending on the state he lives in, there are ways to protect his pre-marriage stash in the event of a divorce if he wants. He may not care though but something to consider.

Also pressuring for marriage and especially kids usually has a very negative effect on most people. He'll get there on his own time and its best just to be a listening ear and supportive friend no matter what they decide.

frugs

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Re: Married vs staying single
« Reply #13 on: January 15, 2020, 10:40:37 PM »
Trying to get myself invited to a future wedding, LOL. (And my kids need to have cousins to play with!)
Both these things are firmly in the "none of your business" column.
Of course you'd be dead wrong since you know nothing about my brother and I.

We hang out a lot, and he has been asking me more and more about what it's like raising kids, and asking for my opinion if this is the girl for the rest of his life, since I know him the best and give him the most sound advice.

I don't get it when people post these unhelpful things knowing nothing about the personal relationships between siblings.

I hope you are not literally telling your brother your kids need cousins to play with because if he doesn't end up having kids, what a guilt trip.

Unless there are kids in the mix (and perhaps even with kids in the mix) there is no compelling argument for marriage. He is fine as is. The financial risk is too great and people romanticize marriage too much.

The best advice you can give him is get a prenup.

MrThatsDifferent

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Re: Married vs staying single
« Reply #14 on: January 15, 2020, 11:33:07 PM »
Well, he’s not single, he’s in a relationship, just not married. Marriage isn’t necessary, particularly if they’re not having kids. It’s their own decision, frankly OP, not sure why you care? If they’re happy with it currently, leave it we’ll enough alone, life has more than enough pressures without 3rd parties moving them in directions they aren’t looking for.

rothwem

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Re: Married vs staying single
« Reply #15 on: January 16, 2020, 06:52:28 AM »
I think Kanye said it best when he said, "Holla, we want prenup, we want prenup yeah.  Its something that you need to have, cause when she leave your ass, she gonna leave with half"

Kidding aside, your brother has a lot to lose if the marriage goes south.  So if he's on the edge, I don't think its wise to sway him into it.  You might know your brother pretty well, but you don't see what goes on behind closed doors and he's not going to tell you. 

LifeHappens

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Re: Married vs staying single
« Reply #16 on: January 16, 2020, 07:25:18 AM »
Trying to get myself invited to a future wedding, LOL. (And my kids need to have cousins to play with!)
Both these things are firmly in the "none of your business" column.
Of course you'd be dead wrong since you know nothing about my brother and I.

We hang out a lot, and he has been asking me more and more about what it's like raising kids, and asking for my opinion if this is the girl for the rest of his life, since I know him the best and give him the most sound advice.

I don't get it when people post these unhelpful things knowing nothing about the personal relationships between siblings.
Look, do whatever you want to do, but in your original post, this was your statement about your brother's relationship:
Quote
My brother has been engaged to a nice girl for 5 years, but can never seem to pull the trigger on actually getting married.  No kids, just them two. No plans for kids for now (they seem to travel a lot and enjoy not having kids).
This in no way indicates you coming onto a forum and asking about another adult's relationship is anything other than the type of boundary violation that causes lots of strife in families. Maybe your relationship is different. Good for you.

Ockhamist

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Re: Married vs staying single
« Reply #17 on: January 16, 2020, 08:17:07 AM »
The rules of the financial game are different for a married couple versus an unmarried couple.   A lot of it isn't advantage/disadvantage, though ... it's just different.  And while one area might be advantageous one way, it'll be disadvantageous another way, and those ways can offset each other.

The rules are different, so how you play is different.   Much of the total overall net ad-/dis-advantage of either status can be overcome just by knowing the rules and playing well.

In any particular case, one status probably comes out a bit better than the other, of course, but the total net difference is rarely if ever big enough to justify getting married or not getting married on that basis.

There are plenty of reasons to choose to get married, and there are plenty of reasons not to.   The most important are the social cultural and religious expectations of the couple and their family and social circle, and, most importantly, what marrying (or not) means to the couple themselves.

There are rarely if ever big enough financial pros or cons for the financial aspects to be a determining factor.   
« Last Edit: January 16, 2020, 10:13:17 AM by Ockhamist »

historienne

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Re: Married vs staying single
« Reply #18 on: January 16, 2020, 09:45:59 AM »
I don't know about your brother, but I would definitely advise his fiancée to get married before they have kids, if that's on the horizon.  With such a significant income gap, there's going to be pressure on her to be the one to do prioritize childcare over developing her own career.  Even if she doesn't quit work to stay at home full time, someone has to take care of the kid who's kid is too sick to go to daycare, do the daily drop-off and pick-up, etc.  In my observation, in couples with big income gaps, the lower-earning parent almost always takes on a disproportionate share of that labor.  Which is an entirely reasonable thing to do!  The reason it's so common is because it's usually the financially optimal choice.  But if they aren't married, it means that the lower earner doesn't have much recourse in the case of divorce.

If they don't have kids, marriage may be less important, although they should still make sure they are on the same page in terms of who is on the deed to the house (if they buy one), funding for their respective retirement accounts, etc.   I'm sure your brother is a nice guy, but I have seen so many people--usually women--get screwed in this kind of situation.

nereo

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Re: Married vs staying single
« Reply #19 on: January 16, 2020, 10:16:18 AM »
I don't know about your brother, but I would definitely advise his fiancée to get married before they have kids, if that's on the horizon.  With such a significant income gap, there's going to be pressure on her to be the one to do prioritize childcare over developing her own career.  Even if she doesn't quit work to stay at home full time, someone has to take care of the kid who's kid is too sick to go to daycare, do the daily drop-off and pick-up, etc.  In my observation, in couples with big income gaps, the lower-earning parent almost always takes on a disproportionate share of that labor.  Which is an entirely reasonable thing to do!  The reason it's so common is because it's usually the financially optimal choice.  But if they aren't married, it means that the lower earner doesn't have much recourse in the case of divorce.

If they don't have kids, marriage may be less important, although they should still make sure they are on the same page in terms of who is on the deed to the house (if they buy one), funding for their respective retirement accounts, etc.   I'm sure your brother is a nice guy, but I have seen so many people--usually women--get screwed in this kind of situation.

This depends greatly depending on the state/province they live in.  Many states provide equal protection to couples who permanently reside together, regardless of whether they are married (de-facto domestic partnership). From a federal perspective I believe the time period is 2 years, and for some states it is just one year. Having a child together typically entitles the primary caregiver to financial support (e.g. alimony payments), regardless of whether they are a recognized couple or not.  In the case of communal property states (Including CA, TX, WA) all property acquired together is considered to be own jointly, regardless of who paid for it and who's name is on the deed.  This is extended to domestic partners, which can be automatic (again, de-facto).  Often people think that prenup aren't worth it for them because they don't have much when they first get together, but fail to realize that it also applies to all teh wealth garnered during their time together, and occasionally even after the breakup.

tl;dr - one is not immune from financial liability simply because s/he is not legally married. Check your state laws.

spartana

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Re: Married vs staying single
« Reply #20 on: January 16, 2020, 11:04:55 AM »
^And not just property and assets acquired jointly while married, but often pre-marriage property and assets that are converted to something else once married. At least in community property states like Calif.

 A friend on the verge of FIRE in his 40s married a women who had very little but a low level job. He cashed out a portion of his 401K he had earned over many working years when single and bought a house (and paid 100% of the cost) and rental property while newly married. A couple of years later they were divorcing and she was entitled to half of those properties even though he had earned that money before marriage and they were in his name.  He also paid alimony for awhile. Plus half of whatever he had acquired (pension, 401K, IRA, etc) during the marriage.
« Last Edit: January 16, 2020, 11:07:58 AM by spartana »

nereo

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Re: Married vs staying single
« Reply #21 on: January 16, 2020, 11:23:02 AM »
related story about my former landlord (California):  Bought a place with his own money for almost nothing in the early 70s near the ocean, before the great real-estate run-up, before Prop 13.  Divorced in the late 1990s after a very lengthy separation. By then his property was worth north of $1M even though it was nothing special, and she was entitled to half the property value.  Since half of his assets were not enough to buy a new place in the same community he cashed out his retirement and savings accounts in order to be able to stay in his home. She had left a decade earlier and had no interest in the home.  He wound up re-mortgaging his home and going back to work part-time in order to cover the value of the home he had bought four decades earlier and paid off in the 1980s.

historienne

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Re: Married vs staying single
« Reply #22 on: January 16, 2020, 11:39:57 AM »

This depends greatly depending on the state/province they live in.  Many states provide equal protection to couples who permanently reside together, regardless of whether they are married (de-facto domestic partnership). From a federal perspective I believe the time period is 2 years, and for some states it is just one year. Having a child together typically entitles the primary caregiver to financial support (e.g. alimony payments), regardless of whether they are a recognized couple or not.  In the case of communal property states (Including CA, TX, WA) all property acquired together is considered to be own jointly, regardless of who paid for it and who's name is on the deed.  This is extended to domestic partners, which can be automatic (again, de-facto).  Often people think that prenup aren't worth it for them because they don't have much when they first get together, but fail to realize that it also applies to all the wealth garnered during their time together, and occasionally even after the breakup.

I should clarify - I am assuming the OP's brother is in the United States. To my knowledge, there are no US states that have de facto domestic partnership.  States such as California that define domestic partnership as a legal status require registration.  Common law marriage is still recognized in a handful of states, but the requirements are specific enough that it applies to almost no one (the couple must generally "hold themselves out as married" over a period of time).  There is no broad recognition of de facto domestic partnership at the federal level in the United States, although common law marriages do count as marriages for the purpose of federal law, and the Obama administration exercised administrative discretion to allow unmarried same sex couples to take advantage of a wide range of marital benefits, which sometimes involved recognizing domestic partnerships for specific purposes (such as accompanying a spouse to a Foreign Service posting). 

Some states do recognize a right to shared property and/or alimony-like support payments upon dissolution of a long-term partnership, particularly one involving children.  In practice, however, those rights are messy to enforce in the absence of a written contractual agreement, requiring extensive enough litigation that it's rarely worth the cost unless the money involved is truly significant.  Marriage itself (or a formal written contract) provides substantially greater protection.  Washington *might* be an exception, as it does recognize property rights based on status rather than on the doctrine of unwritten contract. 

Note too that these protections (or lack thereof) apply not only to dissolution of the partnership through divorce but also to inheritance in case of death, although people are more likely to write a will than to sign an unmarried partnership agreement, so it comes up somewhat less often.
« Last Edit: January 16, 2020, 11:53:26 AM by historienne »

spartana

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Re: Married vs staying single
« Reply #23 on: January 16, 2020, 11:41:07 AM »
@nereo Ihear a lot of stories like that around here in Calif and its also a big reason I (divorced, no kids, home owner, FIREd with a decent sized stash and a govt pension) wouldn't remarry unless I had a strong pre-nup.

minimustache1985

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Re: Married vs staying single
« Reply #24 on: January 16, 2020, 11:50:33 AM »
If she is THE one and they stay together permanently then marriage is the financially prudent path.  Lower taxes for couples with a big income gap, they can get on whoever has the better insurance plan with the benefits not being taxable income (like the employer contribution of a domestic partners rates usually is), if one passes first inheritance/SS benefits for the surviving spouse, etc.

Like a PP I would advise her not to have kids with him without being married, though it depends on the state.  In some states 50-50 custody splits mean both parties pay for half the kids daycare/expenses and get half the time regardless of any income disparity, in others with a 50-50 split the higher earning parent pays child support to the lower earner based on the discrepancy (with the idea being that it keeps the child’s quality of life similar at both homes).  A lot of people will do some shady stuff to reduce or eliminate child support out of spite too- even if it reduces their income or gets them in trouble later, people making decisions with rage colored glasses don’t always make smart ones.  A prenup wouldn’t be a bad idea for both parties TBH.

Also it’s one thing if your brother is *asking* you about this stuff, but I wouldn’t go bringing it up.

wellactually

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Re: Married vs staying single
« Reply #25 on: January 16, 2020, 12:21:39 PM »
Never a good sign when a couple has been engaged for 5 years and he's still polling people to see if she's the one...

We derived significant financial benefits from marriage because of the health insurance plan offered by my employer during the first 4 years of marriage. We probably both would have made different decisions about jobs if we'd not been married and able to utilize it that way. Shoulder labrum surgery was only about $750 with zero in premiums ever for family coverage. Tax-wise, we are on the line of it being a penalty. We've always made really similar amounts (met each other at work in the same title/salary!) and as that amount goes up, we tread the line of it being a penalty.