5 Ways Marriage Can Make You Wealthier

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Married couple
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Marriage seems to have fallen out of favor, but it’s as favorable as ever for your finances.

Marriage rates mostly have declined since the 1960s, according to recent data from the U.S. Census Bureau.

Still, Uncle Sam and private entities such as insurance companies continue to reserve some of their best financial advantages for married couples. Following are five examples of how marriage can help you build wealth, either by lowering significant expenses or building your retirement nest egg.

1. Bigger standard tax deduction

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Married couples are generally eligible for a larger standard deduction on their federal income taxes than other taxpayers.

Under the recently overhauled tax code, for example, the largest standard deduction is reserved for couples who file their taxes jointly. Under the new law, it has roughly doubled to $24,000 per year.

The standard deduction reduces the amount of your income that’s subject to federal income taxes. So, a married couple eligible for a standard deduction of $24,000 for tax year 2018 who choose to take that deduction would not be taxed on the first $24,000 of their taxable income from 2018.

2. Spousal IRAs

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When one spouse works and the other doesn’t, the working spouse may be able to contribute to an individual retirement account for the nonworking spouse. The IRS calls such an account a “spousal IRA.”

There are hitches, such as that the IRS restricts spousal IRAs to couples who file joint tax returns. But a couple who qualify for a spousal IRA can collectively save as much as double the individual contribution limit in their IRAs. For tax year 2018, that amounts to at least $11,000 per year — or $12,000 in 2019.

3. More Social Security options

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Spousal IRAs aren’t the only retirement-related benefit of marriage. Generally, a married person may be able to get a better Social Security benefit thanks to a spouse’s earnings.

As we explain in “12 Ways to Maximize Your Social Security Checks“:

“Married people have an advantage in the Social Security system. A married person may be able to receive up to half the amount of his or her spouse’s full retirement benefit. Even a spouse who never worked may be able to claim benefits.”

4. Lower car insurance rates

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Multiple studies have shown that auto insurance tends to be cheaper for married couples.

For example, a 2017 analysis of car insurance rates by CarInsurance.com found that married folks receive an average rate discount of 11 percent thanks to their marital status.

The website explains:

“Insurance rates for married couples may be lowered by insurance companies under the theory that married people are typically more mature and responsible and are less likely to drive recklessly.”

CarInsurance.com found the size of the discount that a married couple stands to receive varies by insurer and state, though. Additionally, a couple may not see any discount if one or both people have poor driving records.

5. Higher capital gains exclusion for homes

A couple holds a "Sold" sign in front of their home
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Homeowners who sell their primary home may be eligible for a capital gains exclusion in certain situations, according to the IRS. This means folks who qualify for this exclusion would be able to exclude all or part of the home sale from their taxable income.

For married couples who file joint tax returns, the amount of the exclusion is $500,000. For other folks, it’s only half that amount.

What do you consider the biggest financial perk of marriage? Let us know by commenting below or over on our Facebook page.

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