Financial Perspective: Marry, Cohabitate or Stay Single?

People have many different reasons for getting married or not getting married. But for some committed couples, it can come down to a few basic points. One of those is finances. If they hold very different opinions or have contradictory habits when it comes to spending money, finances can become a deal-breaker — much like the decision of whether or not to have children.

Fortunately, when it comes to money management, there are more options and concessions than the family decision. For example, some couples decide — whether marrying or not — to keep their finances separate. They may agree to contribute to certain expenses, but the rest of their individual income is up to their own discretion. Other considerations include the potential advantages of filing jointly versus separate tax returns and joining one or the other’s employee benefits (and whether or not they are offered to domestic partners).1

If you’re thinking about getting married and have these concerns, it’s important to discuss them with your partner. You also may want to consult with a financial professional, both on your own and then together. An advisor can help you understand many of the ramifications of combining finances and provide questions to ask each other that you may not consider on your own. Whether you decide to marry or not, you should both get up to speed on the where and how to invest and whether or not to designate each other as beneficiaries on investment accounts and insurance policies. If you’d like to explore this type of consultation as it relates to your situation, don’t hesitate to give us a call.

In the pro column, a two-income couple that combines finances can halve their expenses for housing and utilities. Plus, combined discipline can enable you to reach savings goals and/or pay off debt faster. However, couples that have one or more student loans may have to pay a higher monthly minimum if those borrowers are subject to a repayment plan based on their earnings. For example, if you get married and file a joint tax return, your spouse’s income will be included in the calculation for how much you owe. This could result in a substantial hike in monthly student loan payments.2

One option may be to file separately, but then you’d lose out on the tax benefits of filing jointly. For example, if spouses have substantially different salaries, the lower one helps reduce the joint income tax bill by pulling the higher salary down to a lower bracket. On the other hand, if both spouses earn high incomes, filing jointly could push them into a higher tax bracket.3 Today, however, the tax code generally imposes this “marriage tax penalty” only on high earners in the 37% tax bracket (single filers earning more than $523,600; married couples earning more than $628,300).4

Another deal-breaker can be debt, especially if one partner brings significantly more than the other. It may provide some comfort to know that whatever debt was acquired before the marriage stays with the original debtor and is not extended to the new spouse. However, too much debt by one or both partners could hurt when applying for a loan, such as a mortgage. Also, be aware that any debt accumulated after the marriage is considered shared debt in common law states (Arizona, California, Nevada, Idaho, Washington, New Mexico, Texas, Louisiana and Wisconsin).5

Unmarried couples also should consider their finances if they decide to live together. For example, if one partner buys a house, presumably the other can pay rent toward the mortgage (rent they would otherwise pay to live separately). However, the renter not only has no rights to the home equity being earned but also lacks the protection of a lease agreement. In other words, if the couple breaks up, the non-owning spouse is obviously the one who will move out, but there should be some agreement as to how long the renter can stay there while looking for another place to live.6 The homeowner, on the other hand, may struggle to meet mortgage payments without that extra rent money.

These are all tough issues, and they tend to exist whether you marry or not. From a financial perspective, the best way forward is for couples to discuss their finances and their financial goals openly, honestly and frequently.

Deborah Nason. CNBC. Nov. 29, 2021. “These financial advisors give newlyweds the ultimate wedding gift: financial compatibility.” Accessed Dec. 27, 2021.

Erin Lowry. Bloomberg. Dec. 18, 2021. “No, Getting Married Isn’t Always Financially Beneficial.” Accessed Dec. 27, 2021.

TurboTax. Oct. 16, 2021. “7 Tax Advantages of Getting Married.” Accessed Dec. 27, 2021.

Erin Lowry. Bloomberg. Dec. 18, 2021. “No, Getting Married Isn’t Always Financially Beneficial.” Accessed Dec. 27, 2021.

James McWhinney. Investopedia. June 14, 2021. “Top 6 Marriage-Killing Money Issues.” Accessed Dec. 27, 2021.

Erin Lowry. Bloomberg. Dec. 27, 2021. “Let’s Move In Together (And You Can Help Me Pay My Mortgage).” Accessed Dec. 27, 2021. 

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.


The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions.

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