First comes love, then comes marriage, then comes… a lot of adjustments: sharing a bathroom (say goodbye to ever seeing the toilet seat down again), “mine” becomes “ours” and holidays are spent forever running between the in-laws. So does that also mean that your finances will change? The short answer is yes. But while your perfect credit score won’t be affected, some things will be—for better or for worse. Take a quick look at this list of some of the ways your finances may (or will) change after you’ve tied the knot from the financial experts at Suffolk Federal.
- Car insurance. That’s right, the ride you had before you got married can now be insured for less money after your nuptials. In fact, people who are married and in their 20s can pay 20 to 26 percent less on their premiums.
- Health insurance. After you get married, you have 60 days to make a change to your current health insurance. As a married couple, you have the option to keep your current, individual plans, join your spouse’s plan, or vice versa. When trying to make this decision, make sure you look into the following:
- How your monthly premiums will change
- What will happen your deductibles
- How your out-of-pocket costs may differ
- Taxes. After your wedding, not only do you have to file as a married couple (if you were married before December 31 of the tax year), but you may also incur a marriage tax penalty. However, it’s important to note that only certain couples get hit:
- Couples without children. Penalties may occur at either the low or high end of the income spectrum, depending on if both spouses have earnings. These couples may pay up to 4 percent more in federal taxes in comparison to when they were single. However, if you and your spouse take the standard deduction, you may face no penalty, and possibly receive a marriage tax benefit up to 6 percent compared to when you were single.
- Couples with children. The probability of tax penalties increases. However, couples that earn very little, or have an uneven income split, may be exceptions.
- Future benefits.
- Roth IRA: When you’re single, you can contribute up to $5,500 to a Roth IRA if annual earnings is less than $116,000. In contrast, married couples can each contribute up to $11,000 (between the two), if annual earnings are less than $183,000—potentially leaving two high earning singles in a worse position post-marriage in terms of this type of retirement saving. However, when one spouse earns more than the other, the lower-income spouse benefits more from this type of savings than if they were single.
- 401(k): Married individuals who both have a 401(k) through their employers can raise their contributions by utilizing any employer match benefits that are available to them.
- Social Security options: Spouses can claim certain benefits based on their partner’s earnings. For instance, a wife can receive 50 percent of her husband’s benefit, making this a benefit for her if it is more than own. One difference after you’re married is 85 percent of Social Security benefits are taxed on couples whose income is more than $44,000 a year.
- Liability. Now for the not so romantic part: Once you’re married, your partner can become a liability. If your hubby or wife ever cheats on a tax return, declares bankruptcy or loses a lawsuit (which we’re hoping for your “happily ever after” that they never do!), your joint assets could be at risk. And if your spouse accumulates a lot of debt, the creditors may look to you to pay it off.
Start your wedded bliss on a stronger financial foot. Whether you and your partner are looking to open a joint checking account or simply need guidance on your joint financial journey, contact the professionals at Suffolk Federal.