In the U.S., more people are choosing to remain single and not be partnered. Census data shows that in 2019 the share of American adults who were neither married nor living with a partner had risen to 38 percent according to an October 2021 Pew Research Center report. The same report indicates that there are differing financial outcomes for those that choose to marry or partner and those that remain single:
- Adults who live with a romantic partner- whether they are married or cohabiting- have significantly different (often better) economic outcomes than those who are not living with a romantic partner.
- Women in cohabiting relationships (80%) are more likely to be employed than unpartnered (77%) or married (73%) women.
- Men who cohabit (89%) are less likely to be employed than those who are married (92%), they're much more likely than single men to have a job (73%).
- Cohabiting adults tend to fare better financially than unpartnered adults, and married adults fare better still
Source: Rising Share of U.S. Adults Are Living Without a Spouse or Partner, Pew Research Center
Regardless of your age, if you’re in a committed relationship, both of you should participate in planning for your financial future. Here are some of the benefits you may receive as a couple:
#1 Tax benefits- When you file as "married or filing jointly" both partners can take advantage of certain deductions. These include child tax credits, adoption credits, tuition and fees tax deduction for college students through the American Opportunity tax credit, and child and dependent care credits.
Married couples filing jointly can have double the income of a single filer and remain in the same tax bracket until they reach the highest bracket. They can earn as much as $81,050 together and qualify for a marginal tax rate of 22%. A single person earning just $86,375 (roughly $5,000 more) would fall into the next bracket up, with a marginal tax rate of 24%.
#2 Benefits in lending- Two incomes are better than one when qualifying for a loan. You may be eligible for a more significant loan amount with better terms with a combined income. Of course, lenders take into consideration both credit scores in their decision.
#3 Health insurance savings- Shopping for better health insurance options and rates through assessing both employer's health insurance can save couples money when choosing their best option- single, single plus dependent, or family plan options.
#4 Financial protection- Although being a couple doesn't ensure positive financial outcomes, the likelihood of weathering an economic fallout from job loss or poor health decreases when having a second income to rely on.
Rely on a financial professional- Couples should meet with their financial professional at least yearly, ask questions, and make decisions together. It’s critical to pick a financial professional that wants involvement from both of you, regardless of sex. If both partners can't be at the meeting, rescheduling is often the best option so that both understand their investments and are fully committed to their financial success.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by Fresh Finance.
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