Young people want to get married, but they have some hang-ups.
Some 83% of Gen Zers and millennials (those aged 18 to 42) anticipate getting married eventually, but about 2 in 5 say marriage is an outdated tradition, and 73% say it's too expensive to get married in the current economy, according to a recent survey from Thriving Center of Psychology.
For many couples, saying "I do" comes with a major upfront cost. In 2022, the average American wedding cost $30,000, according to The Knot.
Sure, you can skip the party and get hitched at the courthouse, but what if you just skipped the whole thing altogether? After all, 85% of respondents in the same survey say you don't need marriage to have a fulfilled and committed relationship.
But financially speaking, it can actually be more expensive to not get married.
"It's important to be realistic about the fact that marriage affords a great number of benefits," says Frank Summers, a certified financial planner and accredited domestic partnership advisor with Cetera Advisors. "It's the default arrangement. It's the basis for all of our laws and rules and systems for the how the government assesses relationships, inheritances and a lot of other things."
When marriage makes more financial sense
The answer to whether it makes financial sense to get married is always "it depends," says Summers.
"Marriage brings about 1,200 rules, tweaks and changes to how people are treated compared to unmarried people," he says.
It's worth it to talk to a financial professional to see what makes sense for your particular situation. But if you have a committed partner and aren't sure whether or not to get married for financial reasons, you can start by asking yourself the following questions.
Who's earning what?
Getting married comes with tax benefits that unmarried couples don't enjoy. Property you receive from your spouse, for instance, is treated as a gift for income tax purposes and therefore isn't taxable to you.
When it comes to what you'll actually owe the IRS, however, the big question revolves around whether you and your partner earn a similar salary, or if one person earns more than the other. Couples who earn about the same pay what's known as the "marriage penalty," as combining their incomes often bumps joint filers into a higher tax bracket.
The opposite is true of those with disparate income, says Kendall Meade, a CFP with SoFi. "If there is a couple where one is a higher income earner and the other makes less, there can be an advantage to getting married."
If you make $100,000 as an individual, for instance, you belong in the 24% marginal tax bracket for tax year 2023. To be in the same bracket as a married couple, you'd have to make more than $190,750 combined. So if your spouse made $60,000, they would bring the two of you down to the 22% marginal bracket.
In some cases, it may make sense for lower earners to stay unmarried, such as if they're receiving a government benefit such as Medicaid, where "you may need a really low level of assets to qualify," says Summers.
Is this a permanent relationship?
Ideally, everyone in a loving partnership wants the answer to this question to be yes. However, Summers has had clients who haven't considered whether the relationship is permanent before going ahead with a decades-long financial commitment, such as purchasing a home together.
If it's truly "till death do us part," marriage affords you several benefits. For one, you have access to spousal individual retirement accounts, which allows working spouses to contribute to an IRA on behalf of a partner who earns little or no income. (Check out this list of the best IRAs, from CNBC Select.)
Social Security rules generally benefit married couples as well. Under certain circumstances, you may be able to claim a benefit based on your spouse's contributions to the program, and will generally receive a benefit in the event that your spouse dies.
Generally, unless you live in a state that recognizes common-law marriage, you won't be entitled to spousal or survivor benefits unless you're legally married. And even in if you do live in one of those states as domestic partners, things can get complicated and difficult to navigate, says Summers.
How complicated is the family situation?
There are myriad family complications that could affect your decision to get married or not. One to keep in mind is how other members of your family might behave if something were to happen to you or your partner. Should one half of a married couple die without a will, for instance, virtually every state recognizes a spouse's right to receive at least part of the inheritance.
In the case of death or incapacitation, unmarried couples (especially those in the LGBTQ community) could have the legitimacy of their relationship questioned by family members.
Other wrinkles, such as whether you've been married before, whether you have children from a previous marriage and whether you and your partner plan on having or adopting children, can all make for a more complicated financial and estate planning picture.
Whether you get married or not, it's always smart to have an estate plan in place, so that your wishes are clear in the event that you die or become incapacitated, says Summers.
"You need to have powers of attorney, both medical and financial. You also need a directive designating a person you choose to make decisions for you," he says. "And it's a really good idea to have a will or a trust."
Ultimately, he says, the less complicated your financial life, the fewer advantages you're giving up by staying unmarried.
"If the couple is moving in together and renting, and both earn similar salaries and have relatively low net worth, that's one thing," Summers says. "There isn't much that's needed unless they want to name one another in legal documents or for medical care decisions."
If things are more complicated than that, and you still wish to stay unmarried, you'd be wise to talk with an accredited domestic partnership advisor who specializes in the unique financial needs of unmarried clients.
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