FIRE Engagement: The Benefits of Getting Married

A lot of readers may be surprised to read that Jenni and I aren’t wed. That’s despite the legal and financial benefits of getting married. We met in middle school and have been together for many years. But, we didn’t feel the need to tie the knot.

However, there are serious benefits to making our romantic relationship a legal agreement. And as we’re getting older, the value of those benefits is only increasing.

Surprise, surprise we just recently got engaged (as hinted at in our recent FIRE monthly update)!

So, let’s set aside all the beautiful and heartwarming reasons two people should consider marriage. We’ll take a moment to think about the financial effects of becoming a legal pairing. There’s both positive and negative.

In this post series, we’ll also drill into our personal story—what our engagement looked like and the total cost.

We hope this helps you and yours make a conscious and intentional decision about your legal arrangement and romantic relationship.

Isn’t Love The Benefit?

You may be thinking, “Chris, isn’t the point of marriage…love?”

Oh, no doubt about that. Culture and traditions vary around the concept of marriage from country to country and religion to religion. But for the most part, the point is to bring people who love each other together with a high level of commitment.

We recognize that, and we hope you do, too. 

But, there’s a lot more to marriage than love. In the US, you’re legally obligating yourself to another person.

There’s a responsibility that comes with that. Like any other legal arrangement you make, you should be conscious of the effects.

It’s more than love. 

This blog isn’t focused on romantic relationships or emotional decisions. But they do occasionally lend context to our FIRE story.

The point of our writing here is our FIRE journey—the decisions we make and their financial impacts. So, for the sake of following the purpose and context of this blog, let’s set love aside for a moment.

But only for this moment. Bring that love back into your life afterward!

Legal and Financial Benefits of Getting Married

Before we talk about the costs associated with getting engaged or our experience, what are the legal and financial benefits of getting married?

Note: As much as we love traveling (with Portugal being a top destination for us lately!), we’re both US citizens. As such, the legal and financial points below are based on US law. However, there tend to be similar arrangements in other countries.

Legal Benefits

Let’s drill into the significant legal benefits of getting married. These involve access and liability.

You have greater access to your partner in an emergency.

If the proverbial stuff hits the fan, your partner may not be able to offer permission for you to make decisions on their behalf.

You know your partner better than any friend or family member could. Pretend they’re unconscious and unable to make medical decisions. There’s unlikely to be a better person who could step in on their behalf.

Who else could negotiate with doctors to follow a path that would most match your partner’s wishes?

Consider this:

In the 35 states that establish a surrogate hierarchy, the highest-priority classes always include spouse, child, and parent, though 8 states also insert partner or “chosen adult” on or immediately below the first ladder rung.

Source: “Who Decides When a Patient Can’t? Statutes on Alternate Decision Makers”, NIH

State law varies, but in quite a few places, your unmarried partner could end up fighting with a living parent over your medical future in an emergency. They could lose to the parent’s priority.

Shared employment benefits.

Generally speaking, an employed partner provides access to various employment benefits for the other partner.

This is most often used for health insurance. But may also include family leave, bereavement leave, and a variety of other forms of insurance.

Employment benefits through marriage will vary greatly depending on your state and the employer’s policies.

Parenting

A person’s parental rights have historically been tied to their being married to the baby’s birth parent at the time of childbirth.

Source: The rights of unmarried parents, Child Welfare Information Gateway (HHS)

Having shared legal rights related to children can be the only motivation that matters to some couples when it comes to getting married. But, there are additional specific benefits.

For example, social security benefits passing from one partner to another after death generally require the receiving partner to be the appropriate age (62+ perhaps) before they can make use of the benefit. But, a receiving partner can be any age while caring for a child that is younger than 16 years old or disabled.

Married partners have additional adoption and foster care rights, as well. Rights for the non-birthing parent are easily one of the major benefits of getting married.

Financial Benefits

And of course, the financial benefits of getting married. These involve taxes, credit, and ownership.

You have access to your partner’s finances when they pass.

We all like to think we’re invincible, but one day, it’s all going to be over. I bet the last thing you’re going to want for your partner is for them to struggle to pay for their financial obligations. That’s all the more important if you provide financial support.

Or, even worse, for them to struggle to pay your bills on your behalf. Dying isn’t cheap.

You must specifically name an unmarried partner as a beneficiary with each financial account you have. Otherwise, account assets will instead flow through normal estate processes.

Without a will dictating an unmarried partner as a beneficiary, this could mean assets wind up with a distant sibling, parent, or even the state.

An Estate Administrator will make many of these determinations through the probate process.

Assets can pass between parties tax-free.

There is no limit to the value of assets that can be passed from one married partner to the other, tax-free.

For example, pretend you want to buy your unmarried partner a car. There is a tax implication to the value of the gift the other partner is receiving.

This includes when one partner dies and wants to leave their estate to the other partner.

Consider this:

The unlimited marital deduction allows spouses to transfer an unlimited amount of money to one another, including upon death, without penalty or tax.

Source: What Is Unlimited Marital Deduction? How It Works and Taxation, Investopedia

The implication is that if you’re not able to benefit from this “unlimited marital deduction”, you are legally obligated to pay taxes on the value of what you receive from an unmarried partner beyond a certain threshold.

The value before a gift tax kicks in has been increasing with inflation. But it’s still below that of typical high-value assets (like a car) one partner may purchase for the other.

Tax filing status change (married filing jointly).

The income tax implication of getting married could improve or worsen for you.

Generally speaking, if two individuals making similar and very high incomes get married, they will be worse off in terms of tax rates.

However, if one partner makes significantly more money than the other, married filing jointly status is generally a significant benefit.

Let’s take a look at 2023’s tax brackets.

As you can see, marriage is a benefit in terms of tax rates up until very high incomes. For example, a couple being taxed on $30K and $59K would fall into the 12% and 22% brackets, respectively. Their combined $89K would reside in the 12% bracket by getting married.

This moves $14,274 of the higher earner’s income from the 22% to 12% bracket. The couple would reduce their tax burden by a whopping $1,427. That’s huge relative to their $89K combined income!

Reduced taxes are likely one of the big benefits of getting married for most FIRE couples.

Meanwhile, things aren’t so rosy for very high-income partners. A two-earner couple where each partner is taxed on $500K would be in the 35% bracket if unmarried.

By getting married, their income beyond $693,751 would be taxed an additional 2% by being in the 37% bracket.

That’d equate to an additional $6,125 annual tax burden for getting married.

Note: Before 2017’s Tax Cuts & Jobs Act, much lower income brackets fell prey to higher effective taxing if two similarly earning partners got married. Tax examples above only consider federal income tax. State taxes vary but likely have their own benefits of getting married.

Social Security benefits pass between partners.

In the US, we all pay a tax to fund a type of income insurance called Social Security. This can pass to a living partner when one dies. If they don’t qualify for Social Security benefits, the living partner is generally entitled to the deceased’s benefits.

These “Survivors Benefits” generally only pass to family and spouses:

If you are working and paying into Social Security, some of those taxes you pay are for survivors benefits. Your spouse, children, and parents could be eligible for benefits based on your earnings.

Source: Survivors Benefits, SSA.gov

Spousal IRAs and IRA sharing.

Individual Retirement Accounts (IRAs) work similarly to social security benefits and other financial accounts. They will generally pass to a living partner when the other passes through probate as mentioned above.

As an additional benefit, an employed spouse may contribute to an unemployed spouse’s IRA through a Spousal IRA.

There are several stipulations and nuances to Spousal IRAs. One key is to ensure you’re married and filing jointly to qualify. Fully funded Spousal IRAs can significantly alleviate tax burdens for married couples.

They effectively let the primary earner double their potential IRA deduction and contribution limit.

Higher levels of credit access.

If both partners earn an income, these incomes can be combined when applying for credit. This is important when applying for a home mortgage or refinance. FIRE folks tend to have fairly low incomes which can make it challenging to qualify for loans and refinancing.

I found this out when rates were really low in recent years but didn’t have enough income to qualify for refinance. Had Jenni’s income been included, we could have refinanced and saved significant money.

But why get married?

Can’t these legal differences be resolved with paperwork, not just a marriage?

Generally, sure. You can draw up the necessary legal documents to ensure your partner has access to you and your belongings, even if you’re not married.

Of course, you’d need to do a lot of legwork to make this happen. You’ll almost certainly need a lawyer to draft the legal documents.

At the end of the day, you’d end up with a legal obligation similar to marriage in all but name.

So, what exactly is the point?

Marriage Benefits in Summary

In summary, Jenni and I would be eligible for nearly all of the legal and financial benefits of getting married mentioned above.

That’s not to say there aren’t cons to marriage as well. We hear too often about divorce and the decimation that it can cause partner estates as legal battles ensue, for example. Marriage can mean partners lose their autonomy and independence. The honeymoon phase eventually ends, too.

However, these issues are mostly related to the relationship. It’s not the underlying legal mechanisms that are triggered by marriage.

Marriage might seem like an institution withering on the vine in the modern age. However, it’s a clear and simple way to create stronger financial and legal bonds between you and your spouse.

With the benefits out of the way, let’s take a look at our personal experience in the next post. We’ll weave the tale of our engagement story. Coming soon!

Then in the third post, we’ll look at the costs associated with making it happen.

Stay tuned for the second post in this series, coming soon!

In the meantime, let us know in the comments what you think about how Financial Independence and/or Early Retirement relate to the institution of marriage.
What legal pros or cons did we miss?
What’s your take?