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The cost of marriage: Money-related reasons couples wait

Jun 28, 2024 | RBC Wealth Management


A growing number of Americans are waiting to get married, with some couples choosing to skip the nuptials altogether to protect their wealth.

engagement ring box

Love and marriage used to be inseparable, but more and more Americans are delaying marriage into their 30s, with some couples opting not to get hitched at all, as the potential cost just doesn’t make sense to some.

In the 1970s, 80 percent of Americans were married by age 30, according to the U.S. Census Bureau. That was the height of the marriage boom. According to a 2023 study by Pew Research, a quarter of 40-year-old American adults have never been married.

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, says Cyndy Ranzau, a wealth strategist with RBC Wealth Management–U.S.

“When you get married, that comes with certain statutorily imposed entitlements or advantages,” she explains. 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—particularly 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 being responsible for another person, and maybe starting a family and being responsible for them, can feel 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,” Ranzau says.

Additionally, getting married when you’re older may make 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, you could 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 getting married 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.

On the other hand, if one partner stands to inherit assets, they may opt 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 hold off on 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 typically 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 certain assets are yours and yours alone, if your use of those assets comingles them 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, Ranzau says.

“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,” Ranzau says. “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 should get married because you love each other, not because of taxes.”


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