The desires of young adults to embark on the journey of marriage are entangled with a web of complexities and considerations. While a significant 83% of Gen Zers and millennials (ages 18 to 42) anticipate tying the knot at some point, their perceptions about marriage are far from uniform. Around 2 in 5 view marriage as an outdated tradition, while a whopping 73% regard it as a financially cumbersome endeavor amidst the current economic climate. These insights emerge from a recent survey conducted by the Thriving Center of Psychology. However, for those contemplating matrimony, financial implications play a pivotal role.

The financial commitment tied to exchanging vows can be substantial. In 2022, the average cost of an American wedding stood at $30,000, as reported by The Knot. Yet, for couples contemplating a life together, the choice might extend beyond just the wedding day, sparking considerations of whether marriage is a requisite for a fulfilling and committed relationship.

Interestingly, 85% of respondents in the same survey emphasized that a satisfying and devoted partnership doesn’t necessarily require marriage. However, from a financial perspective, remaining unmarried might actually be costlier.

Frank Summers, a certified financial planner and accredited domestic partnership advisor with Cetera Advisors, underscores, “It’s essential to acknowledge that marriage offers a multitude of benefits. It serves as the default arrangement, forming the foundation for our laws, regulations, and systems governing how the government evaluates relationships, inheritances, and other facets.” He adds that the financial rationale behind getting married invariably hinges on individual circumstances.

Summers elaborates, “Marriage ushers in around 1,200 rules, adjustments, and modifications that affect how individuals are treated compared to those who are unmarried.” Given this intricate landscape, consulting a financial professional becomes prudent, allowing for tailored advice based on personal situations.

For couples deliberating over the intersection of marriage and finances, several factors come into play.

1. Income Disparities: Marriage offers tax advantages that remain unavailable to unmarried couples. When property is received from a spouse, it’s treated as a gift for income tax purposes and is thus exempt from taxation. However, the critical question lies in the income distribution between partners. Couples with similar earnings might encounter the “marriage penalty,” while those with significantly disparate incomes could enjoy an advantage in terms of tax brackets.

2. Longevity of Relationship: Pondering the permanence of a relationship is crucial before embarking on marriage. Beyond emotional considerations, long-term commitments, such as purchasing property together, entail a profound financial aspect. Marriage facilitates access to spousal individual retirement accounts (IRAs), allowing one partner to contribute on behalf of the other.

3. Family Dynamics: Family intricacies can significantly influence the decision to marry. Family members’ reactions to various scenarios, such as inheritance or incapacitation, might shape these decisions. In states that don’t recognize common-law marriages, legal entitlement to spousal or survivor benefits could be limited.

Ultimately, the choice between marriage and remaining unmarried hinges on a myriad of factors, both emotional and financial. Simplicity and clarity in financial arrangements might be an advantage for unmarried couples. However, for those considering marriage, the depth and breadth of legal and financial benefits must not be underestimated. As the landscape continues to evolve, informed discussions and consultations with financial experts are essential to charting the path forward.

By Impact Lab