Why It Pays to Pair Up

in Financial Planning by

In 2009, New York Times reporters Tara Siegel Bernard and Ron Lieber argued that the price of being single could range from $41,196 (best case scenario) to $467,562 (worst case scenario) over the course of a lifetime. While the authors conducted the analysis to show how legalizing gay marriage could drastically affect individual financial realities, the comparison of a hypothetical married couple with an equivalent-earning unmarried couple showed just how much of a financial difference marriage makes.

In 2013, Lisa Arnold and Christina Campbell expanded upon Bernard and Lieber’s analysis, noting that the financial implications of “being single” were not simply affecting same sex couples who couldn’t wed, but all singletons, a group that makes up nearly half of the U.S population. Their calculations, based on legal and private sector policies that drive up the cost being single, revealed a hefty price tag of $1,022,096 for a woman making $80,000 per year to remain single over the course of her lifetime.

Regardless of how variable or flawed these analyses are, they do point out one certain reality- there is a high price to pay for staying single in America.

The Price of Single Housing

According to the Bureau of Labor Statistics, couples spend an average of 23.9 percent of their annual income on housing while singles spend between 30.3 and 39.8 percent. In addition to not having a partner with whom to split expenses, singles often face a smaller pool of options when searching for housing due to discrimination from landlords based on marital status. Over the course of a lifetime, these discrepancies can amount to significant savings for married couples and high additional costs for singles.

The Price of Single Healthcare

 

A similar pattern emerges for healthcare expenditures. While singles spend about $570 per year on healthcare, couples average only $482 per person. The new healthcare law however, has a provision that actually favors singles in certain cases.

Those who make up to four times the federal poverty limit- $45,960 for singles, $62,040 for married couples- are eligible for subsidies under the Affordable Care Act. Unmarried couples who live together however, have their income assessed separately, meaning that as long as each of them makes less than the individual cut off, they can remain eligible for subsidies while brining in a joint income of up to $91,920. Of course, this provision only benefits a small fraction of singletons. For the vast majority, healthcare still favors married couples.

The Price of Single Lifestyle

 

While singles may be forced to spend more on fixed expenses like housing and insurance, they also tend to be subject to higher prices on discretionary expenses like travel and cell phone bills. Companies that offer family plans and discounts, subsidize those reduced costs with the full priced plans they offer singles, leaving singletons with a higher price to pay yet again.

Additionally, singles often bear the brunt of social expenses alone. All those wedding gifts and baby showers funded from a solitary income without any reciprocity accumulate to a substantial sum over time.

The Price of Single Income Tax

 

Despite cries of a “marriage penalty” when couples start filing taxes jointly, the majority of married couples actually pay less in taxes than they would if they were still single. It’s more like a “marriage bonus”, especially when one spouse makes significantly more than the other.

Cost of Being Single
As professor Lilly Kahng writes, “There is never a single person’s bonus- that is, a single person never pays less relative to a couple, whether married or unmarried, with the same amount of income as the single person.”

The Price of Single Social Security.

 

A spouse who qualifies for Social Security benefits on his or her own record can choose to take their own benefit or half of their spouse’s benefit if that ends up being more. Married couples also have the option of taking half of their spouse’s Social Security benefit when they reach full retirement age, while allowing their own benefits to accrue up to age 70 before taking their own higher benefit at a later date. Neither of these options is available to singles.

Finally, if a single person passes without children, their benefits automatically go back into the system to be provided to whomever needs the money most, but if a married person dies, the money can be routed back to his or her family- in some cases, this even includes estranged spouses.

The Price of Single Retirement

 

While married couples can put two people on an IRA, increasing their annual contribution allowance, singles remain restricted. And while spouses who meet certain conditions can put money into their partner’s IRA, deducting up to $11,000 on their joint tax return, singles receive no benefit from putting away money in support of someone else, nor can someone else put away money on behalf of singles who may be unable to contribute to their own retirement accounts.

When it comes to penalties, singles also face harsher restrictions. While spouses can withdraw money from an IRA early for medical or educational expenses without incurring the typical ten percent early withdrawal penalty, singles receive no such exception.

While the exact price of staying single in America may still be up for debate, there is no doubt that over the course of a lifetime, pairing up can pay off. Despite the benefits though, there are plenty of reasons to relish and enjoy the financial advantages of staying single.

The Financial Benefits of Being Single

 

Fewer Expenses. As a singleton, you have more freedom to choose which expenses to keep and which to ditch in favor of larger financial goals. For instance, you don’t have to budget for thing like cable or high personal care costs if they’re not important to you. If you have a spouse however, these recurring expenses may have to stay as he or she wants cable to watch the big game or simply refuses to see a less expensive stylist.

Financial Control. Rather than negotiating every expense and arguing over clashing spending behaviors, singles can maintain full control over their spending and saving, ensuring that all purchases align with their personal goals and values. In other words, no need to put off your dream vacation while your spouse funds his or her expensive car restoration or mountain climbing hobby every weekend with your limited “fun fund”.

No Financial Liability. The shared financial liability of a marriage, particularly when one spouse carries a high debt load, can be incredibly stressful. Staying single can keep your assets and credit protected in the event that a friend or partner is unable to pay off his or her debts and/or has to file for bankruptcy.

Increased Flexibility. Without having to budget for dependents, singles have more freedom to take risks with their money, investing aggressively, rather than keeping finances tucked away in conservative savings vehicles in case of spousal lay off or short-term child support needs.

No Marriage Penalty Tax. If you marry a similar high income earning spouse (~$100,000+), you will face a marriage penalty tax and pay more taxes than if you were single. Check out the marriage penalty calculator. The government is still in the backward ages where they expect one spouse to stay at home and earn nothing, while the other spouse goes to work, hence why one plus one does not equal two when looking at the federal income tax brackets.

No Divorce. Divorce not only takes a toll on your finances, but also on your emotional health. Although some say it is better to have loved, than to have never loved at all, ask people who are going through a bitter divorce how they feel. With no divorce comes no lawyer fees, no fights, no embarrassing family moments, and no feelings of guilt.

There Are Plenty Of Fish In The Sea

 

There are millions of happily single people out there who are free to spend, save, and invest in any way that works best for them. To be free to do as you please is priceless to many. There are also millions of couples out there who benefit from each others support. Regardless of your relationship status, staying on top of your personal finances is a necessity for long-term happiness.

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Stefanie O'Connell

Stefanie O'Connell

Stefanie O’Connell is a financial expert, Gen Y advocate, speaker and author of the book, “The Broke and Beautiful Life.” She blogs about millennial finance at stefanieoconnell.com. @stefanieoconnel

9 comments

  1. Ricky

    Good article, but I think one should stick to their guns when arguing for or against something.

    “…a single person never pays less relative to a couple, whether married or unmarried”. What about the “Marriage Penalty Tax?” See how the contradictions start adding up?

    Reply
  2. Brendan

    One huge benefit of not getting married is that you don’t have to buy an expensive engagement ring, wedding and honeymoon when you are in your 20s. The money saved can be invested with compound growth for decades.

    Also, all financial advantages of being married are more than offset by the cost of having children (which most married couples do); a cost of thousands of dollars per child. Single with no children is almost always a financially better situation than getting married to someone with comparable income and having children.

    Reply
    • Anonymous

      A child born today will cost about 250k to raise to age 18, then there are the college costs over and above that. Is it any wonder people worry about retirement or kids have a huge student loan burden by graduation.

      Reply
    • Lucy

      Brendan, with a partner who is on board with your financial goals you don’t have to pay for an expensive engagement ring, wedding or honeymoon, nor have children if that is not in your life plan. Also, plenty of non-married couples have children.

      Reply
  3. Kait

    This is an informative article, but I would like to point out that under benefits of singledom you included the increased flexibility of having no dependents. I would have to look up specific statistics on this, but I have a feeling there are quite a few unmarried parents out there.

    Reply
  4. Tony

    Weird,
    I’m 46 and never been married. I have more money, more freedom and zero the headaches my married friends have.
    Ask a divorced man how much of all that savings he got to keep after a divorce.

    I’m OK paying a few bucks for a marriage free life.

    Reply
  5. Steve

    A child born today will cost about 250k to raise to age 18. Then there are the college costs on top of that. Is it any wonder many worry about not having enough for retirement or the kids have a huge student loan debt at graduation.

    Reply
  6. Tamara

    It all depends on the person you marry. If you marry a spendthrift then no amount of tax savings will help you. And if the marriage isn’t stable, then there are no real benefits to be had. In my situation, marriage has increased the family’s net worth. I really lucked out with my husband and we are mostly compatible in our financial outlook. I make the finance/investment decisions (keeping him informed at all steps) because I have a significant interest in the subject. We agree on our goals and are willing to live frugal lives in order to achieve our goals. Together, our costs are lower. The family’s investment choices are allocated across both of our accounts which we view as a part of a single portfolio. We don’t always get the “marriage tax benefit” as our individual earnings have changed with life changes. But for us, there is no “yours” and “mine”. It’s always “ours”, which in my opinion is the reason for which we’ve been successful at saving money (but yes, we can still do better!) I never thought I was the marrying type (then I met my now husband). These days, my opinion is that a good marriage has significant advantages that go far beyond just money.

    Reply
  7. James

    Plus, being single, I would miss out on the greatest asset in my life, my beautiful, sweet, patient, loving wife. The past 32 years of happiness could not have been purchased with all money in this world.

    Reply

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