[Founder's Note: Regular readers know that Katie and I are huge fans of marriage and consider that union to be perhaps the largest determinant of our success over the last couple of decades. Studies repeatedly show that when it comes to both wealth and happiness that married is much better than single, and single is much better than divorced. So I almost hate running a post that potentially discourages my readers from forming and sustaining long-term marriages. Nevertheless, over the years I've had so many questions related to the financial issues surrounding tax, student loan, and employment policies that favor or disfavor marriage, that it would be a disservice to not cover them on the blog. I know many of you have delayed or avoided marriage in order to reap the very real financial benefits discussed in this post.]
By Bonnie Koo, MD, FAAD, Guest Writer
The number of unmarried couples who live together are on the rise whether you know it or not. In fact, I’m willing to bet that some of your “married” friends are actually domestic partners. You may have attended their wedding but that does not mean they signed the legal document. Only their accountant or financial planner may know the truth.
Marriage is a legal contract and offers benefits and consequences when the marriage ends in divorce. Historically, marriage was a business transaction between families. The concept of “I Love You” marriage is modern. Current marriage and divorce laws were put in place mainly to protect the wife, as women often were homemakers and would be financially devastated in the event of a divorce.
As more women join the workforce and become the breadwinning partner (as is often the case for women physicians), these laws can seem antiquated and often work against us. I am not suggesting that you never get married. But it may make a lot of sense to delay marriage for some time. There are a few, mostly financial, perks of cohabitating without signing a marriage certificate. For certain situations, staying unmarried may be the best move.
Unmarried Couples Save on Taxes
Prior to the Tax Cuts and Jobs Act of 2017, many dual professional married couples were subject to a marriage penalty tax. That’s because the married tax brackets were not double the single tax brackets. The penalty came into play when both partners made similar incomes. If one partner made significantly less, or was a stay at home spouse, then a marriage bonus may have applied.
The new tax law has largely eliminated the penalty, but it has introduced another penalty for married couples living in high income tax states — a limit on state and local tax deductions on tax returns, also known as SALT. SALT is now limited to $10,000 whether you are single or married. So, a married couple can deduct $10,000 versus two unmarried partners who can deduct $10,000 each.
There are a few other tax benefits for unmarried couples with children. One partner may file as head of household (HOH) and the other partner files as single. The 2019 HOH standard deduction is $18,350 while the deduction for filing single is $12,200 for a total of $30,550. Contrast this with married filing jointly whose standard deduction is $24,400 total.
If the unmarried couple with children also has access to a high deductible health plan with a health savings account (HSA), they can take advantage of having both a family HSA and a single HSA for a total of $10,500 versus $7,000 for a family HSA only. Hopefully, they are using it as a stealth IRA.
Unmarried Couples May Save on Student Loans
Staying separate can sometimes help with student loans. You may save tens of thousands of dollars if you’re pursuing income-based repayment, including pursuing Public Service Loan Forgiveness. This makes sense especially if you are with another high-income earner.
However, being married may be more advantageous if you live in a community property state (California, Texas, Arizona, New Mexico, Louisiana, Nevada, Idaho, Washington, and Wisconsin) and file taxes separately. In community property states, you can divide the combined income in half. This works well for someone with a partner who makes less.
These calculations can be complicated. I recommend seeking professional student loan advice before delaying marriage for this particular reason.
Blended Families Are Complicated
When partners come together with children from previous relationships, they become a blended family. There is no doubt that this adds both emotional and financial complexity to the partnership. As a result, the divorce rate for blended families is about 60%, higher than for couples who bring no children into the marriage. If both partners bring in children, it approaches 70%.
We all know divorce can be financially catastrophic for physicians. I believe a prenuptial agreement is a significant and often overlooked element of asset protection for anyone entering into a blended family.
Those in blended families should also be aware of all the financial obligations your partner has. Read the parenting agreement which outlines the custody agreement and each parent’s financial responsibilities. Consult a family lawyer in the state of custodial residence of the child(ren) to discuss any precedents.
Although most, if not all, states consider the new spouse’s income separate, it can play a role in certain situations. For example, it does not stop an ex-spouse attempting to file for more child support. Courts have ruled both ways.
Because of the above, I believe forming a “legally” blended family is a top reason to delay marriage until the children no longer require child support and college assistance.
Financial Benefits of Marriage
There are plenty of financial benefits for married couples! You can gift unlimited amounts of money to each other, get access to your spouse’s social security benefits, and automatically be named next of kin. You can also share the estate tax limit—whatever your partner does not use goes to you (if you file an estate tax return). Married partners also have the ability to fund a spousal Roth IRA and to stretch an inherited IRA.
Access to health insurance is generally easier for married couples, although many employers now allow domestic partners to enroll.
Legal Documents for Unmarried Couples
If you opt out of a legal marriage contract, it is even more important that you have other documents in place for protection.
One of the most essential is a Last Will and Testament (LWT) for each of you. Your LWT allows you to name your children’s guardian(s). It will also ensure distribution of your estate according to your wishes. Otherwise, the laws of your state will determine which relatives get what and it’s a pretty sure bet your partner will be left empty-handed – probably after a nasty court fight.
Your LWT also allows you to name an Executor. Without an Executor, the court will decide who handles your estate and controls distribution.
You should each also have Durable Powers of Attorney in case one partner becomes incapacitated. If you don’t have one, again, the court will have to decide who has permission to make financial decisions on your behalf. Of course, we all know about health care proxies. Be sure you have one on file for your state of residence.
Because insurance and retirement account proceeds do not pass through your estate, be sure to update your beneficiaries. Otherwise, the courts will decide who receives the proceeds, such as your partner’s ex-spouse.
Don’t forget to have all of these documents signed and notarized according to the laws of your state or they will probably not be valid. Be sure to keep copies where the other partner can find them. Also, give your partner access to the passwords for your online accounts. Consider a password aggregator, such as LastPass.
Pros and Cons of Being Legally Married – Final Thoughts
The divorce rate for physicians is around 30% (lower than the average of 40%). [Editor's Note: The data I have seen suggests lower numbers- 24% for one physician couples (Although the odds ratio of women to men is 1.51) and 11-20% for dual physician couples and that number is lower and dropping for younger people.] Premarital counseling, discussing common life and financial goals, and crafting a well-thought-out prenuptial agreement will go a long way. Every physician should consider a prenuptial agreement. You’re more likely to get divorced than die prematurely or become disabled. Most of us insure against death and disability, but we do not consider insuring against divorce.
I am not recommending that all couples should avoid or delay marriage. But postponing marriage may make sense for many.
Currently, I'm engaged but do not plan to get married until my stepson graduates college. We have a son together. Our main reason to delay marriage is because we are a blended family. We have wills, power of attorneys, and health care proxies in place. We have also named each other as the primary beneficiary on most of our insurance policies and retirement accounts.
Save the date! We are getting married in 2027!
What do you think? Would you delay marriage for the financial perks of cohabitation? Comment below!
[Editor’s Note: Bonnie Koo, MD, FAAD blogs at Miss Bonnie MD. She is a private practice dermatologist in Pennsylvania. This article was submitted and approved according to our Guest Post Policy. We have no financial relationship other than she has been a paid faculty member of WCICON.]
Interesting post. I’m married. Have been for almost 25 years. It’s been a great marriage overall. When we got married, we were $120,000 in debt (student loans). My wife married me poor.
I can say without a doubt that if I found myself single again (through death of spouse or divorce), I would never remarry. It has no religious context for me. We were married by a “Justice of the Peace”. For me marriage is a nice place to raise children and mine are almost all “raised”.
Luckily my wife and I still love each other…
It’s interesting to me that people get “remarried” after their first or second marriage. For love? You can love someone and not marry them. It is quite complicated financially as noted in this post.
I would not remarry partly due to worry that my estate would then have new claims upon it (new spouse and possibly her children). A prenuptial agreement may not negate these claims entirely. Imagine a new spouse thinking they are owed part of your wealth just because of the later marriage. Owed how? They would not have helped build it like my wife has.
Having only known the compromises of marriage my whole adult life, I would rather be a free agent and answer to no one for the third act (age 55 to 80) should I find myself alone. I would not put any of my estate at risk. It’s not a likely scenario, but the institution loses its luster a bit if there are no children to raise. It’s a religious and social institution.
I guess unmarried, I’m not “Your Huckleberry.” I’m “no thanks, I did that, I prefer my freedom.” By the way, I’ve been faithful and the best spouse I can be and will continue to be, but late life remarriage has always confused me a bit. Must be “for love” or just because it’s what most people do.
I almost completely agree with this assessment. After 20 years of marriage starting at age 21 with no kids and an amicable divorce, after the initial depression I really enjoyed having complete freedom.
Now I feel comfortable having a “permanent girlfriend”. We live together, we act as a married couple. We each have our own finances but with a joint account for certain expenses. We have talked about marriage quite a bit. Neither of us needs it for the financial security blanket, but the emotional security blanket is a different matter.
The “almost” part — I would like to retire in a year or two (mid 40s). I have the wherewithal, but her employer only allows health insurance for married partners, and I’d really like to keep having health insurance :). I do also think there’s a “commitment” factor that comes into play. Even an amicable divorce is painful, and having that incentive may help see a relationship through the inevitable rough times.
I think the other aspect is providing security to your loved one. While I’m fine with the permanent partner situation, I can totally understand why one’s partner would want the commitment to be a bit more official. And I could see marrying my girlfriend to provide her that peace of mind. Neither of us is religious so if we did it we’d do it cheap and easy, maybe for fun make a Vegas trip of it.
Seems to me that the cons could be mitigated by being married filing separately. Am I wrong? If so, why?
Married filing separately is quite different than a single filing. First look at the tax rates (https://www.irs.com/articles/2018-federal-tax-rates-personal-exemptions-and-standard-deductions). Over $300k you are paying more compared to a single filing. Also, I believe that married filing separate also only allows $5000 SALT deduction (per person).
Filing separately is still being married legally.
It just feels weird to me to be signing a prenup with someone who I supposedly love. To me, signing a prenup kind of sets up a sense that one is expected to divorce in the future. What do others think? Of course financially a prenup makes sense, but it still feels like the relationship isn’t about love.
Prenups are saying I love you and respect you and want us both to be protected in the future when we may no longer love each other.
Nothing lasts forever.
So it is prudent to have a pré nup.
How many divorces have you seen among your acquaintances?
That is one way to look at prenups. Another way to look at prenups – it is the ultimate romantic gesture. Think about it, you’re telling your future spouse you want the best for them no matter what.
Thanks for your reply!
Can you further help me understand how a prenup will help communicate to my future spouse that I want the best for them? Is this assuming that they are either going to be pulling in high income, so that if anything happens, they’ll be protected?
It’s the discussion, not the paper that helps you remember what you decided in the discussion.
It *feels* weird to me as well, but now that I’m middle-aged and divorced I’m no longer tied to the naive notion that divorce only happens to other people who are in bad marriages. Divorce happens for a variety of reasons and *NO* marriage is immune to it.
With that wisdom (attained the hard way, of course), I see no problem with a prenup (though agree with the queasy *feeling*).
That said, I believe strongly in slowly combining finances. My girlfriend and I have talked about this. If we get married (and maybe even if we don’t) we plan to keep our current finances separate, but open a joint investment account and each year we’d each contribute ~5% of our individual NW to the joint pot (this is in addition to what we already share for ongoing expenses). If we were to split, we’d each take our individual investments and half the joint.
I speak only as a longtime married person, who would probably never remarry if this marriage ended through death or divorce, and if I did would prenup to ensure my children’s getting the bulk of any inheritance. But when I think of my daughter’s near marriages I think of a prenup as a way to protect BOTH of them. The first fella I thought she might marry seemed likely to be a lower earner and I felt she should consider a prenup to understand what she OUGHT to do for him should they part and she have more/ have brought more $ into the marriage, and be sure whatever one would want for oneself one would acknowledge would similarly be owed to to the ex-spouse. I forget which famous couple it is but there’s (maybe?) a female entertainer or writer who chuckles that her MIL pushed a prenup on the couple as they married since MIL viewed her son as much richer and likely to be fleeced in a divorce. Now the MIL may well be kicking herself regretting that the prenup (if enforced as written of course) would prevent her son from benefiting much from his wife’s multimillion $ success should they ever part ways.
Of course another angle of my kid marrying is that I really don’t want her spouse to inherit much from us if they end up parting! Haven’t figured out how to arrange that- don’t need to yet- but was looking into trusts etc. when the secrecy of one guy’s past made us wonder about golddiggers. And I am not yet of the mindset of a friend who tells me her children-in-law inherit the same portion as her children in her will.
JIM! Your intro to the article is atrocious and shows again your limited perspectice on topics as a very religious person. Dr Koo didnt say dont get married, nor did she at all talk about being single. This is an article about 2 people making responsible financial decisions as a couple!
I think everyone would also agree, if you’re married, don’t get divorced because that costs more than anything!
You had a guest write this great article for a reason, no need to ruin it with your intro.
I agree that your intro was heavy handed.
Perhaps I just take the diatribe too personally as a part of a not legally married but still happy and successful family.
You guys need to stop reading whatever you’re inserting between the lines and focus on what was actually written.
That’s all about us. Not you.
Do you need citations? They’re easily found. Here’s one: https://www.worldfinance.com/wealth-management/for-richer-for-poorer-the-economics-of-marriage Your anecdote of success without marriage is precisely that. Will those anecdotes become more common going forward? Almost surely given cultural changes. But the actual data is still pretty darn clear that married people are more likely to be wealthier and happier than the unmarried and certainly the divorced.
Again, marriage has been a great thing for us. We think marriage is a good thing for society. But wouldn’t the world be boring if we all agreed on everything?
Roger all that.
I want more colored diamond posts.
Nobody wants more of those. But the last time I gave an example of a post I wish I’d never written someone told me that was how they found the blog!
Admittedly, this is his blog, and a perspective you may not agree with is not limited by virtue of its origins. We can each have a perspective without labelling others’ as limited (as everyone’s perspective is inherently limited) or atrocious.
The intro …ugh. Prenups and delaying marriage are sound financial advice just like getting disability or life insurance. If Mr. WCI’s financial advice is so colored by his religion It makes me doubt his objectivity and therefore his recommendations.
I 100% support Jim’s intro. The article is founded on the rising trend of cohabitation instead of traditional marriage, of which Jim is a supporter and has evidence to back it up as being more likely to result in wealth and happiness. Yet, rather than censor the article, he posted in the interest of those who differ on his marriage viewpoint but may benefit from the article’s information. You cannot be more fair to all sides than to present the article to the audience and while offering his take. Having a traditional view of marriage is just a valid as a progressive view. Criticizing him for his viewpoint is frank intolerance.
FP FTW. Well said
Agree. The intro was perfectly fine. Lots of people reading lots of things into it that wasn’t there.
That’s Dr. WCI to you. 🙂
I don’t recall ever advising against prenups or delaying marriage for financial reasons. Nor do I see anything in the introduction specifically written about religion.
But if you prefer not to read things written by religious people, you’re definitely NOT going to want to hear my thoughts on charitable contributions.
I had the same reaction. But in fairness Dr. Dahle always prefaces guest articles with his viewpoints which often are in direct contrast to the author’s viewpoints.
In my case I tend to be overly sensitive to those with religious justifications for marriage. In part because I have seen several “successful” marriages (in that they did not end in divorce) in which one or both parties were truly miserable and, in my opinion, should no longer be together but they stay together because of their religious beliefs. I’ve seen religious marriages that were later annulled (it helps to be a big donor to the church!) to avoid the “religious implications” of divorce. I’ve seen cases where infidelity and/or emotional abuse is tolerated because of religion. It’s very easy to become cynical about religion and marriage.
I do not feel the article was ruined by the intro. I am not religious but I do agree with the points he made. As said this is his blog and his opinions are not only tolerated but should be welcomed of every post. He could just as easily not post anything he does not agree with and we would be worse off without the information. So give the blogger a break in his own house.
Thanks for the valuable feedback from an anonymous critic on the internet.
If you find it difficult to take what is useful from a blog and leave the rest, you might consider getting your financial information from one of the excellent bloggers found on this list:
https://www.whitecoatinvestor.com/list-of-physician-financial-blogs/
While I don’t claim to know the religiosity of every member of that list, I’m confident that there are at least some on that list who are less religious than I am so you won’t have to tolerate these sorts of offensive religious opinions while becoming financially literate.
If anyone was offended by Jim’s intro it must be because they feel guilty about what they are doing. Otherwise, why would they care?
As a (much) less religious doc than Jim I expect he is of course noting his own happy family. Perhaps he wants it clear he does not endorse avoiding marriage given his religion and background. Yet he still kindly and professionally ensures all (accurate, well written) financial perspectives of marriage/nonmarriage submitted to his blog are available for those of us with a different view of marriage.
Note that as he says “married is much better than single, and single is much better than divorced.” That means single is much better than entering a marriage that ends in divorce. And this article brings home the financial aspects of those decisions, even more important for those of us whose culture does not very strongly discourage divorce.
I think delaying marriage makes sense in your situation even though this post will get you some flak.
There’s some real tax savings and it could help even more so for a blended family — it may allow for your stepson to qualify for college financial aid. The major downside in my view (which is touched on briefly) is that many employers do not offer health insurance for domestic partners and getting insurance separately could be quite expensive.
Health insurance can definitely be sticky. We both work so that isn’t an issue. I actually am on Matt’s health insurance – he works for a company that allows domestic partners to be part of all benefits. It’s much cheaper than using my current employer’s plan. Also why flak? I believe flak is due to the religious and emotional attachment to “marriage.” I am not religious.
Regardless of your stance on religion, be prepared to hear some grief. This poor guy sure got it, albeit under different circumstances.
https://www.whitecoatinvestor.com/repaye-marriage-penalty/
Not to be too much of a pest but the religious and emotional attachment to marriage is important. This gets to the root of how we construct our society. There’s a reason same-sex marriage was a major cause.
While it’s legal to do so, deferring marriage primarily to expand your tax exemption does not sit very well with me, especially if a couple presents themselves to the world and their children as married. Of course, there are times when it might make sense not to be married (eg widow and widower in old age with complex estate plans).
Marriage is a serious matter because of the emotional, historical, and religious elements. It’s not a mere contract or sociological construction. There’s a reason same-sex marriage was a big deal.
While it’s legal to do so, deferring marriage primarily to expand your tax exemption does not sit very well with me, especially if a couple presents themselves to the world and their children as married. Of course, there are times when it might make sense not to be married (eg widow and widower in old age with complex estate plans).
In europe unmarried couples are very common, and they have far less “issues” with topics like same sex marriage. Much more tolerant. But we are in the US and this is how the general culture is. You are signing a legal document to get married. What you stated about the extra stuff (social, emotional construct) is your opinion. Not everyone is religious.You are mixing legal marriage with actual commitment. They are not necessarily separate ideas. But this is how most people view it so I get it.
Excellent post Bonnie.
As a physician who has been burnt badly by divorce it is smart to have protections in place. Prenuptial agreements are not the most romantic thing in the world to bring up and many a fight has started as the result of it, but it is one of the few ways you can protect what you bring in to the marriage.
Blended families indeed add another layer of complication and it is understandable that both parties also want to ensure that their own children will be taken care of. The numbers you mention in terms of divorce rate of blended families is indeed worrisome. Is that typically with younger kids in blended family or it doesn’t matter if the kids are adults or not?
Then you see physicians that are serial divorcees, working on their 3rd or 4th marriage. They will never be able to retire with that kind of turnover. It would be even worse if a physician retires early and then after a divorce the safe withdrawal rate is no longer safe as assets are now diminished and that physician has to return to the workforce if possible (might be hard if out many years or let licenses lapse).
Pre-nups aren’t romantic but neither are many elements of sharing a life and finances and being able to talk about the nuts and bolts of daily life is a necessary skill. Now that I have kids, if something were to happen I would either not remarry to have a prenup to protect the kids. Pre-nups are ok for protecting dependent others (kids, parents etc) but I would not marry someone if I thought I needed to be financially protected again them.
I think the numbers for blended families are bad because prior divorces predict future divorce. It’s not the blending of the families but having been divorced that carries risk.
The numbers for blended families are bad because of the stepkids and dealing with some not so nice ex-spouses. It is incredibly challenging to be a step parent.
I bet. I used to be a difficult step child myself.
I am trying to change the view that prenups aren’t romantic. They ARE. You’re telling your future spouse you want the best for them no matter what.
As the higher earner or person with more wealth how can a prenup say to the spouse that you want what is best for them? I am not trying to be critical I just want to understand your meaning.
I think you’re missing Bonnie’s point, which I totally agree with. A prenup is saying, “Why don’t we decide how this union ends rather than letting the State do so?” What you don’t realize is we all have a prenup whether we want it or not. If you didn’t make a formal one, you have the one the State has made for you. That determines how your assets will be split up.
Getting a prenup (which I think is absolutely critical for anyone with children prior to the marriage or any substantial amount of assets or earning capability coming into the marriage and probably not a bad idea for anyone) is romantic. It reduces the strife, pain, and cost of divorce. It’s a nice thing to do. And what time would be better to determine how you split up than at the beginning when you are most in love?
All my partnership agreements and employment agreements determine a priori how we split up. For example, PoF and PIMD know exactly how they get out of the WCI Network and what happens. No fighting. No drama. No legal action. It was all decided beforehand. A prenup is really no different.
That said, chances are good that a prenup may be worse for one party than the State’s automatic prenup. That person might feel shafted by the discussion. But there is absolutely no reason the discussion cannot end at a win-win solution. And if you can’t come to a win-win solution? Maybe you shouldn’t be getting married in the first place. Katie and I had some very frank and serious and maybe even uncomfortable discussions before getting married. Some things are best worked out in advance and the skills and relationship we developed working them out have made things better along the way.
I hope nobody took my comments about being pro-marriage to be anti-prenup in any way. I’m very much a fan. I became a bigger fan the last time we talked about prenups on the blog when I asked Katie what she thought should happen financially if we ever split up (we don’t have a prenup.) Her idea was VERY different from mine. So it’s a good thing we’re happy together.
I’m not so sure about the “romantic” aspects of prenups, but I think the larger problem is the cognitive dissonance between one’s marriage vows (traditionally “til death do us part”) and signing a contract that explicitly contemplates “how this union ends.”
Excellent point.
re: Drop it into MD. Well you are assuming that the lower earning spouse would get shafted from a prenup. It could go either way. But they get to decide vs the state. Big difference.
I see what you mean that is is better to form your own agreement rather then leave it up to the state. I absolutely agree. I hope to never be in a position to need one but I agree they can be useful.
I have no issues with any of the opinions stated here today other then those written in the comments above. I think you made some great observations about where the tax law favors being single. For good or bad I probably would not let those reasons effect my decision to marry but that is just me. Having all the information to make the most informed decision is what is best.
you didn’t mention Common Law Marriage (or did i miss it)? Thoughts? it’s like 8 -10 states still right?
i thought this is interesting to have in place so you don’t need to get a legal divorce in a common law marriage state.
“If you live together in a state that recognizes common law marriages and don’t wish to be married, it’s a good idea for you both to sign a living together statement making it clear that this is your joint intent. If you use the same last name and/or mix property together, it’s essential that you do this. Otherwise a common law marriage may later be found to exist.”
I get that there are certain scenarios in civil marriage may not be advantageous from a legal/financial standpoint, especially when both people are much older. That said, the idea of taking this kind of step primarily to expand your standard deduction and shelter more income from the government, while legal, feels a bit morally questionable. I acknowledge that part of the reason I feel that way is my view that marriage as more than just a legal arrangement – there’s a reason, after all, that same-sex marriage became the cause that it did even when alternative legal institutions were in place. But I digress…
Question for Ms Bonnie and those in similar situations – how do you present yourselves to the world and your children? As husband and wife? Mom and Dad? First names only? Are you “acting” as if you are a married couple or do you make it clear you are not?
That’s a great question. To the world (people I do not know) I refer to Matt as my husband. Just easier. Friends know we are not married. I personally know women physicians who have been dragged to court countless times by their husband’s ex spouses for more money now that there is a rich doctor around. This probably scared me the most.
This refers back to the common law question above. If you refer to someone as your husband long enough, it may become true, correct?
It’s not as simple as calling them your spouse. It’s state dependent of course. I do not live in a common law state currently. http://www.unmarried.org/common-law-marriage-fact-sheet/
I live in Texas, and would never marry again. I wouldn’t risk it, lol! “If you live in one of the above states and you “hold yourself out to be married” (by telling the community you are married, calling each other husband and wife, using the same last name, filing joint income tax returns, etc.), you can have a common law marriage”.
I come from a pretty religious background, so I confess I don’t often understand the discourse on marriage detached from spiritual and emotional language. But I think you do make a great point about being open and honest concerning future expectations and vision for one’s life.
Excellent post! I have often thought of marriage as advantageous from a resource sharing and partnership aspect (ie, two heads are better than one). But, I have seen scenarios where the one party has not been an effective partner and ends up becoming a liability.
Your reasoning for prenups is pretty sound. We don’t have one so we have to make we’re on the same page on several dimensions…even if it’s me bending a little! ?
Yep, keep investing in your marriage 🙂
When I met my wife at my age twenty-five (30 years ago), she was broke, I was broke and had essentially nothing but beater cars and student loans. I was in med school, however.
She implied at that time that if we broke up (ever) that she would leave with what she brought (nothing). Her thinking has evolved since…having birthed our four children and having had her own career aspirations made secondary.
As I said, with or without the religious backdrop, marriage is about commitment, trust and love, but for me, I’m not interested in another turn at it (if I found myself single) as my kids are grown. I have no interest in raising more. I have no interest in placing any more of my accumulated funds and real estate in any jeopardy. When I’m done, it all goes to my kids…in fact, I think I need to make sure if I die, my half all goes to my kids…and not “a new dude.”…
You can definitely make sure “your half” only goes to your kids. In fact Matt and I have our wills written that way – right now we have trusts created at death and it is set up so that the money cannot go to a new spouse.
WCI, If you “hate” to run a post that discourages marriage, then don’t do it. But your intro comes off as rude and disrespectful to the poster. Perhaps you can write your own post later to bring up positive points of marriage.
I read his intro twice and it didn’t seem rude to me. As someone who reads this blog and forum multiple times a day, I feel like I knew Jim’s thoughts as soon as I read the title. That context likely tempered any perceived harsh tones. I imagine Miss Bonnie knew his sentiments as well.
I’m pretty sure Bonnie knows my thoughts on marriage and I certainly am aware of what she and Matt think about it. I recall at least a short discussion on the chairlift with Matt about it last March. The post is actually a great summary of a big part of her talk from WCICON18 (which also generated about as many mean comments as the post.) Marriage is just a controversial topic because it has political, cultural and religious ramifications and we all have different political, cultural, and religious beliefs. That’s something I love about this country and I think it makes us stronger.
I said “almost hate to.” If it was “hate to” you would have never known this post was ever written. You can’t win in this game sometimes. If you run it without comment, you get hate from the pro-marriage crowd. “I thought you were pro-marriage”, “Why are you promoting co-habitating?” “Don’t you know the data shows married people make more and are happier.” etc. If you put a comment, you get hate mail from the anti-marriage crowd- “You’re intolerant.” “I’m disappointed.” “The intro was insulting (although they don’t specify who I actually insulted)” “You’re a bigot.” “You’re too religious.” “The intro…ugh.” “You’re colored/biased/not objective.” etc.
It’s incredibly predictable in advance (this isn’t the first time I’ve written about marriage in the last 8 years). So you sit there with a guest post and have to make a decision. Does the good that will result from running the post outweigh the bad? And you decide. And you go with it. The easy thing to do is to not run it at all. But if you do that any post that talks about or even alludes to any possible politically sensitive topic like marriage, immigration, health care, elections, government shutdowns, entitlements, Social Security, Medicaid, Medicare, the military, or anything else where reasonable people disagree never gets run, discussions never get had, and people never get educated. My staff thought maybe I shouldn’t run it all, that it wasn’t worth the hate that would inevitably come in with or without an editorial comment. I thought it was great material that would answer questions I frequently get and that perhaps I could diffuse the hate in advance with a reasonable, balanced comment. Maybe they were right, but I look at it like this- I’ve had four or five people get upset with my editor’s note and one or two get upset that I ran a post seemingly promoting cohabiting. Assuming only 1% of those upset actually contact me or leave a comment, that’s perhaps 600 people who didn’t like it. Given the 15,000 who read it, that’s about 4%. Apparently 96% thought it was worth running and inoffensive. You can’t please everyone and I gave up trying a long time ago. Welcome to the internet.
Take what you find useful, leave the rest, like anything else you ever read.
Totally agree, Jim. I’m of the school of thought that being offended is a choice.
Either way, thanks to Miss Bonnie and Jim for running an article that gives the perspective on a growing trend that has many financial implications.
It astounds me that you would even have had to consider not running this (or that you had to make a political decision to preface the topic) due to people’s concerns about not advocating for marriage in 100% of scenarios.
Love whomever you want, live with whomever you want, raise kids with whomever you want — but if you’re trying to save money, consider your legal contracts — why on earth is that a controversial consideration on a FINANCIAL BLOG!?? (this is rhetorical, don’t worry)
Now, the fact that in 2019 the government still financially subsidizes or penalizes people based on their family structure is another issue altogether…but appears likely that topic isn’t ready for prime time over here.
Yup, I’m still getting flack weeks later from both sides on this controversial topic.
Forgive me for asking a silly question – for taxes, does married filing separately save you from any of the extra taxes described here? Will that make it the same as a single tax filing, or not at all?
Thanks!
MFS usually raises your tax bill. Most are better off with MFJ, but some (often two high income earners) are better off both filing single–the infamous marriage penalty.
MFS can be used to maximize the amount forgiven in the PSLF program by lowering IDR payments.
I went back and read the intro since it generated several comments and an explanation from WCI.
It’s neither insulting nor biased. As WCI said, you can’t please everyone and there are dozens of topics that people hold strong views on, marriage being one.
Politics, religion, money, sex…to each their own. In the meantime, I learned I need a trust that activates on my death to protect “my half” from any new suitor. My wife is beautiful and unlikely to join a convent on my passing.
Just another perspective – my physician husband and I are not legally married for financial reasons. We are very, very religious and believe couples should live together in the context of marriage. We had a religious ceremony and signed religious marriage documents that are binding in our culture. Should we ever get divorced (very happily married) we would need to go through the complex process of obtaining religious legal divorce documents, which would include mediation of assets and custody etc. Many states recognize these religious marriage documents in the context of a civil divorce. For us, the religious document was all that really matters – the government’s recognition of that marriage doesn’t hold much weight socially or emotionally as that was already fulfilled by our religion. From a personal perspective, I don’t think the government should have anything to do with marriage, which should remain a religious institution, and all recognized legal partnerships should just be civil unions. To us, the religious and legal connotation of “marriage” are two separate spheres.
Thus, we only considered financial implications when considering getting married and right now (husband is a resident) it does not make financial sense. Right now, those dollars saved really count on a resident salary. We do intend to get legally married once he is done residency, as it does make a lot of logistics easier re: health insurance, documentation etc. We’ll be fine taking the financial hit in taxes then when we will have more breathing room in our budget. This may be a controversial view for some based on current American social constructs, but I think the fundamental American concept of separation of Church and State supports the idea that the government should not have a say on the status of your religious union. It should purely be within the context of legal implications – right of attorney, custody, taxes, inheritance etc.
Most people just go along with the status quo: marriage is a religious matter, the government is involved, and there are social legal, financial, and tax consequences.
I tend to agree with you and think all relationships that have legal standing should be “civil unions”. To me, marriage has nothing to do with religion, but it certainly does in most cultures.
My understanding is that in community property states such as CA, living together after a few years can qualify the contesting party as common law spouse, with legal right to half of money earned during the co habitation. Prenups too often don’t hold up after a few years of marriage or co habitation.
CP state and common law marriages are totally separate things. CP is how they handle property in the event of a divorce. The Number of states that recognize common law marriage are just a few – and certain things have to happen before it gets recognized – this isn’t a, oh it’s been a few years and we live together type of thing. And how do you know prenups don’t hold up- data?
WCI and Bonnie MD thank you for the post.
Just wanted to add another tax dynamic for those who can take advantage of the 20% pass thru deduction. For physicians, the deduction starts to phase out at taxable incomes of $157.5k for individuals and $315k for married filing jointly (MFJ). If one spouse is a 1099 independent contractor and the other is w2, it may be easier to get under $315k as MFJ compared to $157.5k being single. In addition, the maximum deduction for the couple combined would be 20% x $157.5k filling as individuals vs 20% x $315k as MFJ.
Example: John is a 1099 independent contractor sole proprietor with qualified business income of $300k and taxable income of $207.5k. Sue is a w2 employee with taxable income of $100k. Filing as individuals, the pass thru deduction would phase out for John. Now imagine, John and Sue are married, qualified business income is $300k and taxable income is $307.5k. The phase out deduction is 20% x 300k or $60k. At the 24% tax bracket this represents a $14,400 after-tax savings.
One other note, the marriage tax penalty still exists for MFJ with taxable incomes from 600k to 1 million.
Good point.
I love this post! I am in a dual-physician household with a child, and we are married, just not legally. We had a wedding, we wear rings, etc. We did it because just in the year we got married, as residents, we would have paid an additional $3,000 in taxes. We ran all the numbers, and this makes financial sense for us. Also, as a woman, I was frustrated that me having a similar earning potential as my husband was going to yield a large tax penalty for the two of us – how outdated. We have all the paperwork recommended above and probably won’t legally marry unless the benefits outweigh the harms for us. I feel strongly that marriage and legal marriage should be thought of separately, and people should do the legal paperwork if it’s the right thing for their situation, which it often but not always is.
Anonymous9, I’m curious how come you would have the $3000 tax penalty as a woman if you were married? Because you could no longer file as HOH? Good for you for figuring out what works best for you guys!
It was a $3000 difference between the two of us filing single and separately and the two of us filing as a married couple. The HOH part would have gone to one of us or the other (kind of odd to figure out, since we made the exact same amount of money as residents at the same hospital) but the overall difference for us as a unit was about 3K.
WCI, I am curious where you get the statistic(s) about married people being happier than singles, and singles happier than divorced.
Though I think a true meta-analysis is difficult, most (all?) studies that have crossed my virtual desk have always seemed to say that above generally holds true for men, but actually not for women (on average). In fact, even when you look at divorced men and women (which I tend to agree is likely worst case financial picture for most earners), the difference in post-divorce life between the sexes is quite marked*.
In a way, the theories for the above findings may actually somewhat support the more recent statistics about physician marriages too.
*this is mainly looking at male-female heterosexual marriages
Finances aside, I find it a fascinating topic.
https://www.psychologytoday.com/us/blog/living-single/201303/marriage-and-happiness-18-long-term-studies
https://tonic.vice.com/en_us/article/8xvx8a/marriage-makes-people-happier-new-study-finds
https://www.vix.com/en/wellness/527357/science-proves-married-couples-are-happier-everyone-else
https://metro.co.uk/2017/12/22/study-shows-that-married-people-are-more-satisfied-with-life-than-the-rest-of-us-7179380/
https://www.amazon.com/Case-Marriage-Married-Healthier-Financially/dp/0767906322
Hey WCI, sorry I meant to respond to this earlier. Interesting smattering of articles. There is definitely conflicting data, but, like with medical journals, you have to see what’s being looked at and how it’s being measured.
Part of the confounders are happy marriage vs unhappy marriage, the joy of getting out of an unhappy marriage (vs being never married), and the stigma associated with singleness vs the state of being single itself.
“Happiness” is definitely hard to measure sometimes — saw an interesting lecture on it at a physicial well-being CME — I recall one interesting point was how you get different answers depending on how you ask the same question (e.g. ask single person about their happiness satisfaction about life AFTER you ask them about their dating life, and the answer can be opposite). It goes along with satisfaction being affected by society’s expectation, vs actual personal satisfaction absent stigmas, etc.
I’ve looked at a lot of these studies, and one point I do see frequently (esp in the more well-done studies) are that women tend to be overall objectively happier single whereas men tend to be happier married — so interesting how it’s directly opposing society’s stereotype of women being obsessed with marriage and men “giving in”. But the reasoning behind the results (from a social and emotional perspective) do seem to make sense.
Anyway, re: the data, it seems the first article you cited (written by a scientist specialized in the field, looking at studies from all over) actually is saying the oppositte of what I think you thought it was saying? The same author wrote a more recent piece (will list at the top below), digging in a little deeper re: the differences between the sexes in heterosexual relationships, with some really compelling findings. I am most fascinated by the difference between the sexes after divorce — besides that divorced men tend to be more (for lack of a better term) “attractive” as a new mate for someone else, it seems that divorced women seem more content to remain single vs deciding to get into another relationship, whereas the men may suffer more sense of “loss” after divorce (i.e. they were getting more out of the relationship besides the partner themselves) and are more motivated to recreate that scenario.
The metro.co.uk article you cited happens to include a link to another of their articles also citing the opposite, kinda admitting the data isn’t clear (I listed it second):
The rest, well, you’d have to decide which sources seem most reliable, up-to-date, using more valid data, etc. Of course I have my bias, but I would suggest that the newer info goes beyond society’s persistent narrative re: single life.
Financially…of course that’s another story that can go either way. 😉
https://www.psychologytoday.com/us/blog/living-single/201701/is-it-true-single-women-and-married-men-do-best
https://metro.co.uk/2016/08/08/rejoice-single-people-have-more-fulfilling-lives-than-married-people-6054978/
https://www.independent.co.uk/life-style/love-sex/women-why-happier-single-than-men-relationships-hard-work-survey-mintel-a8050511.html
https://www.huffingtonpost.ca/2017/11/13/women-happier-being-single-than-men_a_23275651/
https://www.nbcnews.com/think/opinion/why-we-thought-marriage-made-us-healthier-why-we-were-ncna801646
https://thoughtcatalog.com/shahida-arabi/2017/12/single-women-are-happier-than-society-thinks-they-are-according-to-research/
https://divorcedmoms.com/5-reasons-married-women-arent-as-happy-as-single-women/
Very amazing reasons in the form of pros & cons. I specially like the pros. Thanks for sharing.
If you are solely focused on money and controlling all these situations then yes this OP post makes sense in regards to marriage. However, the majority of historical persons of consequence were married, and I doubt that is a coincidence for many reasons. So you may have your money at the end of your life with these “committed relationships” in lieu of official marriage, however, chances are then significantly higher no one will remember your name in 100 years.
Not to troll, but this may be one of the more inane theories I’ve ever seen digitized in the last decade or so. Talk about correlation vs causation…