Financial Benefits of Marriage vs. Being Single
Discover the financial advantages and risks of marriage compared to staying single.
Financial Benefits of Marriage vs. Being Single: What’s Better?
Every year, approximately 2 million Americans get married, according to the National Center for Health Statistics. Most newlyweds anticipate that marriage will increase their happiness, but few consider whether it might also enhance their financial security. Research suggests that getting married can have significant implications for your wealth and financial well-being, though the benefits are not guaranteed and come with notable risks.
A comprehensive 2005 study from The Ohio State University examined the relationship between marriage and wealth accumulation. The research found that married couples experienced substantial increases in their net worth compared to their single counterparts. After 10 years of marriage, couples reported an average net worth of approximately $43,000, compared to just $11,000 for people who remained single. The study also revealed that wealth accumulation increased by around 14 percent for each year of marriage, with married individuals nearly doubling their wealth over time—an increase of more than 93 percent compared to being single.
However, this research also uncovered a critical caveat: people who married and then divorced were worse off than any other group, including those who never married. After divorce, the average man retained only $8,500 in assets, while the average divorced woman had approximately $3,400. This dramatic decline illustrates that while marriage offers financial advantages, the risks associated with divorce can be equally substantial.
Understanding the Financial Costs and Benefits of Marriage
Marriage affects your finances in multiple ways, both positively and negatively. Several factors determine whether marriage will improve your financial situation, including your income level, living arrangements, and whether you have children. Understanding these factors can help you make informed decisions about your financial future.
How Married Couples Build Wealth Faster
Married couples accumulate wealth more rapidly than single individuals for several key reasons. First, couples benefit from significant economies of scale by sharing household expenses and duties. Instead of maintaining separate residences, utilities, and household services, married couples split these costs, resulting in substantial monthly savings. Additionally, married couples are more likely to engage in long-term financial planning when thinking and living as a unit, which promotes consistent saving and investment habits.
Another advantage is that married couples often receive financial support from family members that single individuals may not access as readily. Monetary wedding gifts are customary in many cultures worldwide, and parents frequently help newlyweds purchase their first home or establish themselves financially. These additional resources can give married couples a significant head start in building wealth.
Tax Benefits for Married Couples
One of the most substantial financial advantages of marriage comes through tax benefits. When married couples file a joint tax return instead of filing as individuals, the IRS often allows them to pay lower taxes than their combined individual tax liability would be. The standard deduction for married filing jointly can be higher than the combined standard deductions of two single filers, and couples may qualify for tax credits and deductions unavailable to single taxpayers.
For example, consider a head of household earning $60,000 annually who takes the standard deduction, child tax credit, and $2,000 from the child and dependent care tax credit. This individual would owe $660 in taxes. A married couple with the same $60,000 combined income using identical deductions and credits would pay nothing in taxes. However, a married couple where each spouse earned $60,000 (for a combined income of $120,000) would pay $8,375—more than 10 times as much as the single head of household.
The Tax Cuts and Jobs Act of 2017 eliminated the marriage penalty for most Americans. However, the penalty still applies to couples earning over $622,050 annually, who pay a higher percentage of that income in taxes than a single person making $311,000. Conversely, if one spouse earns all or most of the household income, the couple may receive a “marriage bonus,” paying less in combined taxes than they would as individuals.
The Marriage Penalty for Low-Income Couples
Interestingly, very low-income couples can also face a marriage penalty. Those who qualify for the earned income tax credit (EITC) receive less money back when filing a joint return. For example, in 2020, a childless couple with a combined income of $17,000 would receive only $359 from the EITC. By contrast, two single people each making $8,500 would receive $538 individually. The financial impact of getting married would cost this low-income couple $717—approximately 4 percent of their total income.
Insurance and Retirement Benefits
Marriage provides access to insurance and retirement benefits that single people cannot obtain. Married couples can often add their spouse to health insurance policies, potentially reducing overall insurance costs for both individuals. Additionally, married couples benefit from spousal retirement benefits and survivor benefits that accumulate over time. Married couples also receive significant discounts on long-term care insurance—up to 40 percent—because spouses are statistically more likely to provide care for each other at home, reducing the insurance company’s costs.
Access to Better Credit Terms
While getting married does not directly impact your personal credit score, your spouse’s credit history and score can positively influence your financial profile when you apply for joint loans. This improved credit position can lead to better loan terms and lower interest rates on mortgages, auto loans, and other credit products, resulting in substantial savings over the life of the loan.
The Financial Costs of Getting Married
Despite the numerous financial advantages, marriage carries significant costs that prospective couples should consider carefully. These expenses can offset some of the long-term benefits of matrimony, particularly in the early years of marriage.
Wedding Expenses
For many couples, the wedding itself represents a substantial financial investment. The average cost of an American wedding continues to rise annually, and many couples spend tens of thousands of dollars on their ceremony and reception. While wedding gifts and family contributions can offset some of these costs, the expense of planning and executing a wedding can represent a significant drain on savings that could otherwise be invested or used to pay down debt.
The Risk of Divorce
Perhaps the greatest financial risk associated with marriage is the possibility of divorce. While being married is generally beneficial for your financial health compared to remaining single, divorce can completely reverse these gains and leave you in a worse financial position than if you had never married at all.
The OSU study found that on average, divorced individuals have 77 percent less wealth than single people in their age group. This dramatic decline in wealth can result from multiple factors, including legal fees, asset division, spousal support obligations, and the costs of maintaining separate households. For high-net-worth individuals, divorce can be catastrophically expensive. When Formula One tycoon Bernie Ecclestone divorced after 23 years of marriage, the settlement reached $1.2 billion. Media magnate Rupert Murdoch’s 1999 divorce cost him $1.7 billion.
Interestingly, research shows that a couple’s financial decline does not occur immediately after divorce. In fact, a couple’s wealth typically begins declining about four years before they officially end the marriage. This decline may occur because couples often maintain separate households before formally divorcing, incurring double housing and living expenses. Additionally, the stress of a failing marriage can impair each spouse’s ability to work productively and earn income.
For high-net-worth individuals concerned about protecting accumulated wealth, prenuptial agreements offer some protection. These legal documents can help ensure that hard-earned wealth, inherited assets, and family legacies remain secure in the event of divorce. However, even with a prenup in place, divorce remains financially damaging and can leave both parties in considerably worse financial circumstances than they experienced before marriage.
Comparative Financial Outcomes
| Financial Status | Average Net Worth | Wealth Change | Key Characteristics |
|---|---|---|---|
| Married (10 years) | $43,000 | +93% from single status | Shared expenses, tax benefits, dual incomes |
| Single | $11,000 | Baseline | Individual expenses, no spousal benefits |
| Divorced (male) | $8,500 | -77% from single status | Legal fees, asset division, separate expenses |
| Divorced (female) | $3,400 | -77% from single status | Legal fees, asset division, earnings gap |
Factors That Influence Marriage’s Financial Impact
The financial benefits of marriage are not universal and depend heavily on individual circumstances. Income level plays a crucial role—high-income couples may face tax penalties, while very low-income couples might lose EITC benefits. Childless couples earning between $37,000 and $171,000 annually who take the standard deduction generally face no tax penalty and may receive marriage tax benefits as high as 6 percent compared to filing as single individuals.
The presence of children significantly alters the financial equation. Families can claim the child tax credit and child and dependent care tax credit, which provide substantial tax relief. The dependent care credit provides up to $3,000 for childcare costs for one child under 13 and up to $6,000 for two or more children. The percentage of costs covered ranges from 35 percent for incomes up to $15,000 to 20 percent for incomes of $43,000 or more.
Income distribution between spouses also matters. Couples with relatively equal incomes may experience different tax outcomes than couples where one spouse earns substantially more than the other.
Frequently Asked Questions About Marriage and Finance
Q: Does marriage always lead to increased wealth?
A: While research shows that married couples typically build wealth faster than single individuals, marriage does not guarantee financial success. Outcomes depend on factors including income levels, spending habits, financial planning, and whether the marriage remains intact. Divorce can completely reverse any financial gains from marriage.
Q: Why do divorced individuals have so much less wealth than single people?
A: Divorce involves substantial costs including legal fees, court proceedings, and asset division. Additionally, the couple’s financial decline often begins years before the divorce is finalized as they maintain separate households and the stress of a failing marriage impacts earning capacity.
Q: Can a prenuptial agreement protect my wealth if I get divorced?
A: Yes, prenuptial agreements can help protect accumulated wealth, inherited assets, and family legacies. However, they do not eliminate all costs associated with divorce, and enforcement varies by jurisdiction.
Q: Will marriage lower my taxes?
A: For many couples, yes. Filing jointly often results in lower taxes than filing as individuals. However, some high-income couples and very low-income couples may face a marriage penalty, resulting in higher taxes than if they filed separately.
Q: What financial benefits do married couples receive beyond tax advantages?
A: Married couples benefit from shared household expenses, spousal health insurance benefits, retirement account benefits, lower long-term care insurance premiums, better credit terms, and family financial gifts that single individuals typically do not receive.
Q: How much does the average wedding cost?
A: Wedding costs vary significantly based on location, guest count, and personal preferences. The average American wedding costs tens of thousands of dollars, though many couples receive monetary gifts and family contributions that help offset these expenses.
Key Takeaways
Marriage presents a complex financial picture with substantial benefits and risks. Research demonstrates that married couples accumulate wealth at rates more than 93 percent faster than single individuals, primarily through shared expenses, tax benefits, and joint financial planning. Couples benefit from insurance discounts, retirement account options, and family support unavailable to single people.
However, the financial risks associated with marriage—particularly the risk of divorce—cannot be ignored. Divorced individuals experience a devastating 77 percent decline in wealth compared to single people. The financial impact begins years before the divorce is finalized and can include astronomical legal fees, especially for high-net-worth individuals.
The decision to marry should not be made solely for financial reasons. Instead, prospective couples should carefully consider both the financial advantages and risks, understand how their specific income situation will be affected by tax laws, and ensure they are emotionally committed to making the marriage successful. For those concerned about financial security, prenuptial agreements can provide added protection. Ultimately, the financial benefits of marriage are most pronounced when the relationship remains stable and both partners are committed to long-term financial planning as a unified team.
References
- Marriage and Divorce’s Impact on Wealth — Jay Zagorsky, The Ohio State University. 2005. https://www.nchStats.org/
- Tax Cuts and Jobs Act of 2017 — U.S. Congress. 2017. https://www.congress.gov/
- Internal Revenue Service: Filing Status and Tax Benefits — Internal Revenue Service, U.S. Department of Treasury. 2024. https://www.irs.gov/
- Long-Term Care Insurance and Marital Status — Symetra Financial Corporation. 2024. https://www.symetra.com/
- Credit Scoring and Joint Applications — Consumer Financial Protection Bureau. 2024. https://www.consumerfinance.gov/
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