The number of U.S. adults who are unmarried but living with a partner is on the rise. Among unmarried cohabiters ages 50 and older, 57 percent are in their 50s, 30 percent are in their 60s, 10 percent are in their 70s and 3 percent are in their 80s, according to a Pew Research Center analysis of the Current Population Survey.
Sometimes living together but staying unmarried works to a couple's financial advantage, and other times, not so much.
“Marriage may actually make you ineligible for certain benefits because some government benefits discourage people from getting married,” said Darla Kashian, a senior vice president and financial advisor with RBC Wealth Management in Minneapolis.
Although the reasons an older unmarried couple cohabitates may no longer be about romance, they may find marriage is financially beneficial because the standard deduction for a married couple is $24,000 compared with only $12,000 for single filers under the new tax law. Tax deductions reduce taxable income and less income means a smaller tax bill.
“So many things are just so much simpler when you're married, like wealth transference and health-care decisions,” said Kashian.
For the sandwich generation -- people facing costs for helping their elderly parents and educating their college-age children at the same time -- it may be easier to agree on expenditures if a couple is married, Kashian said. She sometimes advises couples to consider purchasing a home for elderly parents who need a place to live. “You not only have an asset, but you’re also subsidizing your parent’s life and upon death the house can be sold to finance the college education costs for your children,” said Kashian.
Kashian equates paying for a son or daughter’s college education with paying for child care, which makes it easier for clients to envision completing the four-year task, she added.
“The average cost of child care today is about $15,000 a year depending on where you live,” Kashian said. “I advise my clients to inquire with the grandparents about what they may be able to contribute to their grandchildren’s higher education.”
Through that process, Kashian has uncovered opportunities for contributions from family members that can alleviate stress, even among clients who are not rich or even well to do.
When parents want to pay for big-ticket expenses such as an adult child’s elaborate wedding, Kashian advises them to use discuss the monetary gift as a values choice to the child.