What to consider before getting married after 60
Many divorced and widowed boomers are finding love the second time around. The question many have is, "Should marriage necessarily follow?" The decision is an emotional one, but it also has serious financial implications. Below are some financial considerations that experts suggest you take into account before saying "I do" again.
To some, the most obvious benefits of marriage are pooled income and shared expenses; but that's not an automatic slam-dunk, according to one certified financial planner. As with any marriage, young or old, finances can be a constant source of stress and aggravation. Similar spending and saving habits can ease a lot of that burden, but you may not be lucky enough to fall in love with someone who is in sync with your financial habits and plans.
If you can communicate well enough to negotiate a joint plan for saving, debt management, retirement, and other financial considerations then give it a shot. Otherwise, it might be smart to keep your finances separate, even if you get married. This may require a legal pre-nuptial agreement.
In most cases, unmarried live-in partners are not eligible for the other partner's employer benefits, such as health care. Depending on what plans are available to each of you, marriage could potentially save you money and give you better care.
A good employer health insurance plan is hard to come by. If one of you doesn't have health insurance or if one partner's plan is superior to the other's plan - or even less expensive - then tying the knot could be a smart move. Getting married over 60 can have benefits!
Also consider your retirement expenses. Health insurance is one of the costliest line items for retirement budgets. If one of your employer plans pays for a spouse's health insurance in retirement, that is a potential savings of thousands of dollars a year. The same might be true for dental insurance, employer-sponsored life insurance, disability, and long-term care policies.
One of the biggest retirement decisions people face is when and how to take pension benefits. Most pensions have options that enable spouses to continue receiving monthly checks after the pensioner dies. Choosing this option may mean that the pensioner will receive slightly lower monthly payments while alive, However, if the pensioner does not marry, then no one will receive any benefits after the pensioner dies.
For example, if a straight pension pays $4,000 per month during the pensioner's life, then the spousal continuation option might pay $3,000 per month during the pensioner's life and continue paying that amount to the surviving spouse after he or she dies - until the spouse dies as well. That can add up to a lot of money; if the couple is not married, then the partner receives nothing.
However, the continuation option might not always be the best choice. If the pensioner is insurable, buying a life insurance policy for the surviving spouse and taking the maximum monthly pension benefit might make more sense. To understand how to maximize your pension benefits, it's a good idea to consult a financial advisor who can help you run the numbers.
Social Security benefits
Unmarried partners aren't eligible for each other's Social Security benefits; but if you marry, you can become eligible for benefits if your spouse has satisfied the requirements, whether or not you have ever worked. If you are divorced and decide to remarry, the rules get a little complicated. As an unmarried person, you can collect benefits on your ex-spouse's record beginning at age 62, provided that your spouse is also collecting benefits at that point. If you remarry before age 60, then you lose this option until your new marriage ends, whether by death, divorce, or annulment. However, if you are getting married after 60, you can still exercise the option - or collect benefits on your current spouse's record, if they are higher. Because the rules are so specific to each beneficiary's specific situation, it is wise to call your local Social Security office to discuss your circumstances.
There are many tax benefits for married couples but also a few disadvantages. Consult with your tax preparer about your particular situation re inheritance taxes, estate taxes and marriage tax penalty, which can affect married couples in higher tax brackets (above 25 percent). If you and your spouse were each earning the same salary, you would effectively pay more tax on that salary by filing as a married couple than if you were to each file separately, as single people.
Other financial considerations
Married couples often get discounts on insurance policies and other financial services. For example, they often enjoy discounted premiums for long-term care policies. However, phase-outs for retirement plans and Roth IRAs are less favorable for married couples than for single people. Also, ask your partner whether he or she is paying alimony to a former spouse; be sure you understand how it may impact your joint finances going forward.
A pre-nuptial agreement is worth considering if either partner has significant assets or children from a previous marriage or relationship. Imagine that Spouse 1 has a lot of money and property plus a couple of children. Spouse 2 has no children and few assets. If Spouse 1 dies without appropriate planning, the children may not receive what their parent intended. This issue must be dealt with carefully, and an independent attorney or mediator should become involved long before the second marriage.
When both spouses had previous marriages and bring children and assets to a new marriage, there is great potential for financial strain. The children may resent and disagree with the new spouse. To avoid conflict, before you marry, consider hiring lawyers to draft both a pre-nuptial and detailed wills for each of you - to make sure your next time around is everything you dream it should be.