The cost of marriage: Five money-related reasons couples wait

Love and marriage used to be inseparable, but a growing number of Americans are delaying marriage in to their 30s, with some couples skipping the nuptials altogether in order to protect their wealth. While it’s not a lack of love, the potential cost of marriage just doesn’t make sense to some.

In the 1970s, eight in 10 Americans were married by age 30, according to the U.S. Census Bureau. In 2017, that age increased 15 years with eight in 10 Americans being married by the time they’re 45 years old.

While there are a variety of reasons for the delay, finances—from both a legacy planning perspective and a financial security perspective—have become a big part of the conversation about whether or not to tie the knot, explains Cyndy Ranzau, a wealth strategist with RBC Wealth Management–U.S.

“When you get married, that comes with certain statutorily imposed entitlements or advantages,” says Ranzau. But there are also potential disadvantages. “The financial implications are certainly something couples are scrutinizing as they decide whether or not to wed.”

Waiting to be in a better place financially

With societal attitudes surrounding marriage evolving, many young Americans—specifically millennials—are taking the time to gain their financial footing, Ranzau thinks.

“They’re delaying because they don’t feel financially secure themselves,” she says. “So the thought of going out on their own and being responsible for another person, and maybe starting a family and being responsible for them, feels overwhelming.”

For young Americans grappling with the high cost of continuing education, there’s also a clear benefit to putting off marriage. “Once they get married, their spouse’s income and assets are included in the financial aid calculation,” says Ranzau.

Additionally, getting married when you’re older also makes more sense from a tax and estate planning perspective, Ranzau explains.

If you’re making good money when you’re young, it may be more tax efficient to file as an individual or separately, even if you do marry. “It may be better to file separately because you may avoid the marriage penalty if you are earning a significant annual income and, thereby, end up paying less in terms of income taxes,” she says.

Once you’ve accumulated significant wealth later in life, “being able to combine your estate tax exemption amounts as a married couple may outweigh what you owe as a married couple paying income tax,” she adds.

Postponing marriage to help protect assets

Another reason people may delay marriage is if their partner has a significant amount of debt, Ranzau explains. Putting off marriage would protect one partner’s assets from being attached to a claim against the other partner.

On the other hand, if one spouse stands to inherit assets, they may decide to wait until after the inheritance is received to marry. That’s because in some states, an inheritance is considered marital property unless it’s held in trust for the benefit of the inheritor.

“If an individual were to be married when they receive the inheritance and then divorce, their spouse may walk away with half of the inheritance,” Ranzau says.

Hesitating because of income inequality

In some situations, couples may delay tying the knot because one partner is the key earner.

“If [one person] is making all the money they often like to keep it separate,” Ranzau says, adding that they’re willing to share with their partner and support them, but they do not necessarily want to co-own assets officially.

While that may not sound terribly romantic, it’s a decision that could prove to be wise should the couple marry then divorce. Under most state laws, in the event of divorce, spouses are entitled to a share of the couple’s combined property.

Even if you agreed on the front end of the marriage that a certain asset, such as an inheritance, is yours and yours alone, if your use of those assets comingles the inheritance with marital assets—for instance, if you use some of the funds from an inheritance to buy the marital home—it becomes more difficult to distinguish whether it should remain separate or if it has been converted to marital property. It can get complicated quickly in the event of a messy separation further down the line.

“Prenups are not bulletproof,” Ranzau says. “The entitlements that marriage legally brings to a relationship often muddy the water and may for some people be prohibitive.”

Protecting benefits and support for children

For those with children from a prior relationship, remarrying carries its own share of interruptions to the financial status quo. For example, any financial aid a child receives for education purposes could be recalculated with the new spouse’s assets factored in, if the assets are owned jointly, which could reduce the amount of financial aid. Child or spousal support may also be cut off or reduced if they remarry, says Ranzau.

“I think a lot of it comes down to, how does marriage impact everything else?” she says.

Retirement accounts like IRAs or 401(k)s can also get complicated in second marriages.

 “You can do postnuptial agreements after the fact, and you can certainly implement planning to help protect and accomplish the goal of keeping things separate,” says Ranzau. “But only if you agree… if you’re not in agreement then things can go sideways.”

Don’t do it for taxes, do it for love

While many will argue that relationships—and finances, for that matter—are far more complicated today than in the past, marriage has always come with financial trade-offs for couples both young and old. However, Ranzau says, “At the end of the day, my belief is very simple: You get married because you love each other, not because of taxes.”