Financial upside / downside of marriage vs cohabiting
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Financial upside / downside of marriage vs cohabiting
I've been engaged for 4 years and we are having a child at the end of this year. I earn significantly more then my spouse an have 10x network. Live in MA. Knowing that 42-45% of marriages end in divorce (google 2018 divorce stats), my parents are divorced and 2 out of 7 of my close friends are divorced (2 of them are cohabiting and not married) I'm looking at my financial health moving forward under 3 scenarios...
1. Remain cohabiting
2. Marry and stay married
3. Marry and divorce.
Obviously, i would wish for #2. However, #3 appears to have a huge downside e.g. division of assets and alimony (which i've just learned about and cannot believe there is such a law), which in theory could half my networth. Option #1 appears to be straightforward financial e.g. there is no separation of assets in MA (of course I'd pay child support).
To sum up, marrying has a 40-50% chance of decreasing my Networth by 50%? It sounds like a risky investment for me. Of course, there is the prenup route option (but i assume that doesn't effect alimony).
What are the financial upsides of marriage? Personally, I'm happy cohabiting (we live like a married couple anyway), therefore, I'm very interested in other peoples views on the topic (please save the 'if you truly love them' comments for another forum) ....
1. Remain cohabiting
2. Marry and stay married
3. Marry and divorce.
Obviously, i would wish for #2. However, #3 appears to have a huge downside e.g. division of assets and alimony (which i've just learned about and cannot believe there is such a law), which in theory could half my networth. Option #1 appears to be straightforward financial e.g. there is no separation of assets in MA (of course I'd pay child support).
To sum up, marrying has a 40-50% chance of decreasing my Networth by 50%? It sounds like a risky investment for me. Of course, there is the prenup route option (but i assume that doesn't effect alimony).
What are the financial upsides of marriage? Personally, I'm happy cohabiting (we live like a married couple anyway), therefore, I'm very interested in other peoples views on the topic (please save the 'if you truly love them' comments for another forum) ....
Re: Financial upside / downside of marriage vs cohabiting
I think when you decide to have a child, financial considerations take a back seat.
Yes alimony exists - especially if one person is the stay at home person. Families have different styles of organizing themselves. The main priority are any children who are on the scene and what is best for them.
Yes alimony exists - especially if one person is the stay at home person. Families have different styles of organizing themselves. The main priority are any children who are on the scene and what is best for them.
Re: Financial upside / downside of marriage vs cohabiting
You already know the answer. A prenup can reduce what the other spouse gets in a divorce, but the courts won't honor an agreement completely one sided. Marriage can have financial benefits in terms of income and estate taxes.
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Re: Financial upside / downside of marriage vs cohabiting
Social security benefits are an obvious upside to marriage - a spouse can be eligible for 50% of your FRA benefit, even if they never work. There's no way for cohabiting couples to earn this benefit, although divorced spouses that were married 10 years are eligible for spousal benefits.
Re: Financial upside / downside of marriage vs cohabiting
My suggestion would be to recheck your divorce statistics. Divorce rates vary widely depending on number of prior marriages, age, education, income, etc. It may be that your probability is much lower (or much higher) than average.
Also, your primary responsibility now is to your soon-to-arrive child. That is the lense through which you should be making decisions.
Of course you are happy cohabiting. You hold all the financial cards, and having that control is your highest priority.
Also, your primary responsibility now is to your soon-to-arrive child. That is the lense through which you should be making decisions.
Of course you are happy cohabiting. You hold all the financial cards, and having that control is your highest priority.
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Re: Financial upside / downside of marriage vs cohabiting
The way I understand it, the recent tax code changes help keep much larger chunks of your income at a lower rate because of MFJ.
I haven't done the exact math.. But you could probably run the numbers in your situation.
Using a very simplified example, if your SO makes $50K and you make $500K. Combined you make $550K.
Your SO will pay little to no taxes on her $50K but you will find the majority of your income getting taxed in the 35% tax bracket. If you get married you will find the majority of your income instead getting taxed in the 32% tax bracket.
Basically each of the federal tax brackets is double the size for a MFJ situation vs an unmarried Individual. If your SO gives up her job to look after your child, you are essentially giving up a major tax benefit to you. Even the standardized deduction is doubled.
I haven't done the exact math.. But you could probably run the numbers in your situation.
Using a very simplified example, if your SO makes $50K and you make $500K. Combined you make $550K.
Your SO will pay little to no taxes on her $50K but you will find the majority of your income getting taxed in the 35% tax bracket. If you get married you will find the majority of your income instead getting taxed in the 32% tax bracket.
Basically each of the federal tax brackets is double the size for a MFJ situation vs an unmarried Individual. If your SO gives up her job to look after your child, you are essentially giving up a major tax benefit to you. Even the standardized deduction is doubled.
Last edited by bligh on Mon Jul 30, 2018 8:54 pm, edited 1 time in total.
Re: Financial upside / downside of marriage vs cohabiting
One advantage/disadvantage of cohabiting is that (for the most part) either party can walk out on the "partner" at any time for any reason, or no reason. If there's a child there can be custody and support issues but those don't necessarily impact the rights of the parents to live apart or live with someone else as they choose. Different strokes for different folks. YMMV.
Of course married couples can do the same thing it's just a whole lot easier and cheaper when you've only been cohabiting.
Of course married couples can do the same thing it's just a whole lot easier and cheaper when you've only been cohabiting.
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Re: Financial upside / downside of marriage vs cohabiting
The legal protections for all the financial details of a marriage especially once you get a child into the mix far outweighs any financial calculation. Everything should be kept separate financially when you live with a roommate which is what you have today.
Re: Financial upside / downside of marriage vs cohabiting
There could be problems with assets and income if you stop shacking up, not only if you get married and then divorced. That is especially true if a child is involved. Since you are concerned about financial issues if your relationship ends, consider implementing a contract either way, a nonmarital cohabitation agreement or a pre-nuptial agreement. In this particular situation, it could benefit your child as much as the two of you. Talk to a lawyer.
I would encourage you not to go into marriage unless you are willing to commit to sharing everything 100% instead of dividing things up, but that's just my personal opinion and many would disagree.
I would encourage you not to go into marriage unless you are willing to commit to sharing everything 100% instead of dividing things up, but that's just my personal opinion and many would disagree.
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Re: Financial upside / downside of marriage vs cohabiting
#2Dottie57 wrote: ↑Mon Jul 30, 2018 8:11 pm I think when you decide to have a child, financial considerations take a back seat.
Yes alimony exists - especially if one person is the stay at home person. Families have different styles of organizing themselves. The main priority are any children who are on the scene and what is best for them.
Once you have a child together, you are no longer "safe". You will have to share even if seperated.
There is also the upside immeasurable gratification of using your wealth to come to the aid of your spouse, and hares in need or emergency.
j
Re: Financial upside / downside of marriage vs cohabiting
According to https://www.reneelazarlaw.com/blog/2018 ... etts.shtml
" ... unwed Massachusetts fathers do not actually have any rights regarding their children at all until further court action is taken."
If you plan to buy a house at some point, having a spouse may help to get a mortgage at a lower rate. It increases the amount you can put in tax advantaged accounts.
" ... unwed Massachusetts fathers do not actually have any rights regarding their children at all until further court action is taken."
If you plan to buy a house at some point, having a spouse may help to get a mortgage at a lower rate. It increases the amount you can put in tax advantaged accounts.
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Re: Financial upside / downside of marriage vs cohabiting
Just because you aren't married doesn't mean it won't cost you if you break up.
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Re: Financial upside / downside of marriage vs cohabiting
I think it’s wise for you to investigate this to knownwht you are getting yourself into. A lot of people don’t do the research and get blind sided later on.
As any divorced person can tell you, marriage at its core is a legal contract with significant legal, tax and personal finance implications. Some of the implications could be good, others not good, depending on the specific circumstances. Keep in mind that in a heterosexual marriage, the vast majority of divorces are instigated by the woman. Also, the vast majority of alimony and child support is paid by the man to the woman.
My advice:
1. Lots of related posts already on Bogleheads. Do a thorough search. Take your time. Don’t rush into anything.
2. As with any legal contract, talk to a lawyer about it. A family law specialist who can step you through all the possibilities. A few hundred dollars spent for a lawyer is peanuts compared to what you may end up spending later on and for the rest of your life.
3. Ask your lawyer about how child support is calculated in your state. Also ask about common law marriage. This is where you make a conscious decision not to get married but the government jumps in and treats you as if you are anyway.
Good luck.
As any divorced person can tell you, marriage at its core is a legal contract with significant legal, tax and personal finance implications. Some of the implications could be good, others not good, depending on the specific circumstances. Keep in mind that in a heterosexual marriage, the vast majority of divorces are instigated by the woman. Also, the vast majority of alimony and child support is paid by the man to the woman.
My advice:
1. Lots of related posts already on Bogleheads. Do a thorough search. Take your time. Don’t rush into anything.
2. As with any legal contract, talk to a lawyer about it. A family law specialist who can step you through all the possibilities. A few hundred dollars spent for a lawyer is peanuts compared to what you may end up spending later on and for the rest of your life.
3. Ask your lawyer about how child support is calculated in your state. Also ask about common law marriage. This is where you make a conscious decision not to get married but the government jumps in and treats you as if you are anyway.
Good luck.
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Re: Financial upside / downside of marriage vs cohabiting
Single tax rates suck.
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Re: Financial upside / downside of marriage vs cohabiting
I would simply get a lawyer draw up a water tight pre-nup to keep assets and income completely separated, forever. I got married in Quebec and this was pretty standard. My bride was more "wealthy" than I was at the time and she initiated the process. The other party may feel slighted at the suggestion but it felt right to me. Five decades later, I am by far the more wealthy party. Stuff happens. I was more of a BH than her. I do not think either of us experienced any negatives from the "separation de biens". I paid cash for the last home we bought and I put it in her name; to aid in giving her a greater sense of security now that we are in our 70s. Our previous homes were in our joint names but investment RE was all in my singular ownership. Retirement portfolios are in joint names. Basically you both end up with total flexibility over the coming decades.
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Re: Financial upside / downside of marriage vs cohabiting
Been married close to 40 years. Can't imagine being engaged for 4 years, nor evaluating whether I should get married by looking at divorce stats... But to each their own.
My parents got divorced, and both sisters got divorced. I have been married longer than my parents by many years.
From the day we married, all our assets are joint (except retirement accounts which can't be). I've earned magnitudes more than my wife, who stayed home raising our kids. So what? If you are "invested" in a relationship, everything is 50/50. Period.
I would argue that if you have to ask "What are the financial upsides of marriage? " you shouldn't get married, and you should consider having some open discussions with your "spouse".
My parents got divorced, and both sisters got divorced. I have been married longer than my parents by many years.
From the day we married, all our assets are joint (except retirement accounts which can't be). I've earned magnitudes more than my wife, who stayed home raising our kids. So what? If you are "invested" in a relationship, everything is 50/50. Period.
I would argue that if you have to ask "What are the financial upsides of marriage? " you shouldn't get married, and you should consider having some open discussions with your "spouse".
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Re: Financial upside / downside of marriage vs cohabiting
Financial upside? No
If your happy living like a married couple with no intentions of getting married, then why would you get/stay engaged?
I wouldn’t look to statistics or friends marriages as a barometer to what might come.
If your happy living like a married couple with no intentions of getting married, then why would you get/stay engaged?
I wouldn’t look to statistics or friends marriages as a barometer to what might come.
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Re: Financial upside / downside of marriage vs cohabiting
I’d argue that an engagement is itself a contract.....
“Will you marry me?”
“Yes, longterm100, I will” (puts on ring)
Would the relationship survive the alteration of that contract to mean something other than an agreement to get married? I’d argue that by choosing not to get married after getting engaged, you would be rocking the boat severely.
Marriage makes things much easier in a Hospital setting, as I’m sure you’ll learn with a kid coming soon. If your fiancée had a medical emergency at work, and you weren’t the one to bring her in, you’d have a very hard time being in the know regarding what’s going on, and absent an advance directive already on file, you wouldn’t get to represent her interests. Medical privacy laws have become downright draconian.
The divorce rate is not as bad as you think, and I expect you’d find the median length marriage is a lasting one. I also don’t know how many multiple divorcees are inflating the stat you cite.
https://www.nytimes.com/2014/12/02/upsh ... es-on.html
“Will you marry me?”
“Yes, longterm100, I will” (puts on ring)
Would the relationship survive the alteration of that contract to mean something other than an agreement to get married? I’d argue that by choosing not to get married after getting engaged, you would be rocking the boat severely.
Marriage makes things much easier in a Hospital setting, as I’m sure you’ll learn with a kid coming soon. If your fiancée had a medical emergency at work, and you weren’t the one to bring her in, you’d have a very hard time being in the know regarding what’s going on, and absent an advance directive already on file, you wouldn’t get to represent her interests. Medical privacy laws have become downright draconian.
The divorce rate is not as bad as you think, and I expect you’d find the median length marriage is a lasting one. I also don’t know how many multiple divorcees are inflating the stat you cite.
https://www.nytimes.com/2014/12/02/upsh ... es-on.html
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Re: Financial upside / downside of marriage vs cohabiting
Thanks for the link and its imbedded links. The myth that 50% of marriages end in divorce has been hooey for years. I remember one author's attempt to point out the error of that statistic from more than 25 years ago. The foundation of the myth is pointed out, again, in an embedded link.motorcyclesarecool wrote: ↑Tue Jul 31, 2018 5:46 am The divorce rate is not as bad as you think, and I expect you’d find the median length marriage is a lasting one. I also don’t know how many multiple divorcees are inflating the stat you cite.
But OP, YMMV. Best of luck whatever your decision.The figure is based on a simple -- and flawed -- calculation: the annual marriage rate per 1,000 people compared with the annual divorce rate. In 2003, for example, the most recent year for which data is available, there were 7.5 marriages per 1,000 people and 3.8 divorces, according to the National Center for Health Statistics.
But researchers say that this is misleading because the people who are divorcing in any given year are not the same as those who are marrying, and that the statistic is virtually useless in understanding divorce rates.
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Re: Financial upside / downside of marriage vs cohabiting
Financial benefits are in taxes and SS mostly, but there's also an "efficiency bonus" from not having to do things separately. I was engaged for 4 years before marrying (cohabiting for an additional 1.5 before that....We both like to take our time making important decisions...) and although it wasn't drastically different after, there is a weight off my mind from figuring out how things are split.
A prenup doesn't affect alimony, but alimony isn't what you should mainly be worried about in the situation you've described. Encourage your spouse to keep their own career and you'll not have too much to fear from alimony IMO.
Though not financial, marriage is also important for the legal benefits around any kids you have - presumption of parental rights for both and custody in the event of a split. Also medical decision making, and inheritance rights. Including efficient inheritance of Roth IRAs that isn't available to anyone but a spouse. These are the kinds of rights that were mainly at stake for same-sex couples seeking the right to marry - and they matter.
Re: your divorce stats, OP, look at some of the more detailed breakdowns of those numbers. For college educated couples with high incomes in first marriages, the rate drops down towards 10%.
More important is whether you two actually want to send your lives together, even when something happens that might appear to pit your interests against each other. If you are truly partners, marry (and take as much time as needed to decide lol). If you would want to bail if your SO suffered a health crisis that threatened to wipe out half or more of your net worth.... Then don't marry, but also don't have kids together any time soon.
Best of luck.
A prenup doesn't affect alimony, but alimony isn't what you should mainly be worried about in the situation you've described. Encourage your spouse to keep their own career and you'll not have too much to fear from alimony IMO.
Though not financial, marriage is also important for the legal benefits around any kids you have - presumption of parental rights for both and custody in the event of a split. Also medical decision making, and inheritance rights. Including efficient inheritance of Roth IRAs that isn't available to anyone but a spouse. These are the kinds of rights that were mainly at stake for same-sex couples seeking the right to marry - and they matter.
Re: your divorce stats, OP, look at some of the more detailed breakdowns of those numbers. For college educated couples with high incomes in first marriages, the rate drops down towards 10%.
More important is whether you two actually want to send your lives together, even when something happens that might appear to pit your interests against each other. If you are truly partners, marry (and take as much time as needed to decide lol). If you would want to bail if your SO suffered a health crisis that threatened to wipe out half or more of your net worth.... Then don't marry, but also don't have kids together any time soon.
Best of luck.
Re: Financial upside / downside of marriage vs cohabiting
What are the financial upsides of having a kid?
http://www.alllaw.com/calculators/child ... sachusetts
Put your numbers in there and see what your child support payment would be.
Did you factor finances in so much about having a kid with a woman you're not married to? You realize she could just split after having the kid and collect child support...
http://www.alllaw.com/calculators/child ... sachusetts
Put your numbers in there and see what your child support payment would be.
Did you factor finances in so much about having a kid with a woman you're not married to? You realize she could just split after having the kid and collect child support...
Re: Financial upside / downside of marriage vs cohabiting
Your divorce rates are off and, since it only takes a few seconds on Google to see why, I have to assume you are simply using the-oft cited but misleading statistic as a justification not to get married.
You also made a promise to get married and presumably your SO stayed with you on that promise. Otherwise, why did you agree to the charade of engagement?
There are some financial benefits to married, which are also easy to Google. You will also automatically be considered the father/mother of your child in most jurisdictions.
I’m of a different ilk and would consider myself married anyway once the pregnancy occurred. I understand not everyone feels this way in this day and age. But I f you aren’t going to get married, just be honest with your SO. He or she should be aware of your feelings and, as the significantly lower earning "partner", should have the option of not contributing financially to the relationship to account for this. You should not be the only one to financially benefit from this arrangement.
If you feel there is some benefit to you to get married, then get a prenup and get married. At least see a lawyer to see what your options are. You may be agreeable to some of them.
Good luck,
JT
You also made a promise to get married and presumably your SO stayed with you on that promise. Otherwise, why did you agree to the charade of engagement?
There are some financial benefits to married, which are also easy to Google. You will also automatically be considered the father/mother of your child in most jurisdictions.
I’m of a different ilk and would consider myself married anyway once the pregnancy occurred. I understand not everyone feels this way in this day and age. But I f you aren’t going to get married, just be honest with your SO. He or she should be aware of your feelings and, as the significantly lower earning "partner", should have the option of not contributing financially to the relationship to account for this. You should not be the only one to financially benefit from this arrangement.
If you feel there is some benefit to you to get married, then get a prenup and get married. At least see a lawyer to see what your options are. You may be agreeable to some of them.
Good luck,
JT
Re: Financial upside / downside of marriage vs cohabiting
You did see the part in the first line of the OP where they're having a kid at the end of this year?
Re: Financial upside / downside of marriage vs cohabiting
First marriages between college educated people only have like a 15% divorce rate. relying on average divorce rates is like relying on average savings rates.
Re: Financial upside / downside of marriage vs cohabiting
Anyone who sums the situation up as "a risky investment" should never marry.longterm100 wrote: ↑Mon Jul 30, 2018 7:54 pmTo sum up, marrying has a 40-50% chance of decreasing my Networth by 50%? It sounds like a risky investment for me.
You should never have children either. They are always a cost center.
Cohabiting with someone of less wealth is a financially losing proposition too. So live alone or find someone with more wealth than you.
Last edited by JoeRetire on Tue Jul 31, 2018 6:50 am, edited 1 time in total.
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Re: Financial upside / downside of marriage vs cohabiting
Did you ask your significant other how she feels? OP - show her this thread. If you are serious about engagement and marriage, you’ll understand that things of significance are to be shared with each other. Keeping secrets like this in a relationship will doom you. It’s like being on a boat where both parties are not rowing in sync, you aren’t going to have a smooth ride.
Financially-when two people are on the same page you’ll find it much easier to accomplish goals. When one party is spending and the other saves you’ll find it’s like swimming against the tide, very hard to move forward. You’re having a child? Married or not, you have a financial responsibility towards child. You can research all you want, look at others- understand that no two people/couples are the same, just because your parents are divorced does not mean you are destined for the same. Cut your own path in life and stop making assumptions based on faulty math.
Financially-when two people are on the same page you’ll find it much easier to accomplish goals. When one party is spending and the other saves you’ll find it’s like swimming against the tide, very hard to move forward. You’re having a child? Married or not, you have a financial responsibility towards child. You can research all you want, look at others- understand that no two people/couples are the same, just because your parents are divorced does not mean you are destined for the same. Cut your own path in life and stop making assumptions based on faulty math.
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Re: Financial upside / downside of marriage vs cohabiting
Too late, the child is on the way.JoeRetire wrote: ↑Tue Jul 31, 2018 6:44 amAnyone who sums the situation up as "a risky investment" should never marry.longterm100 wrote: ↑Mon Jul 30, 2018 7:54 pmTo sum up, marrying has a 40-50% chance of decreasing my Networth by 50%? It sounds like a risky investment for me.
You should never have children either. They are always a cost center.
Cohabiting with someone of less wealth is a financially losing proposition too. So live alone or find someone with more wealth than you.
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Re: Financial upside / downside of marriage vs cohabiting
Marriage is not math, nor is it statistics. You are either committed to a life together or you are not. Unless you weren't a willing participant in the creation of this soon to be born child you have already made a decision that has greatly impacted two other individuals for a lifetime. One of them will call you Daddy and will love and adore you and their Mommy. Please evaluate this decision from their perspective.
You can't control what decisions will be made by others in the future but as a grown man you can control the decisions you make today.
Wishing you wisdom.
Cheers
You can't control what decisions will be made by others in the future but as a grown man you can control the decisions you make today.
Wishing you wisdom.
Cheers
Re: Financial upside / downside of marriage vs cohabiting
I said "should never". I stand by what I wrote.Grt2bOutdoors wrote: ↑Tue Jul 31, 2018 6:51 amToo late, the child is on the way.JoeRetire wrote: ↑Tue Jul 31, 2018 6:44 amAnyone who sums the situation up as "a risky investment" should never marry.longterm100 wrote: ↑Mon Jul 30, 2018 7:54 pmTo sum up, marrying has a 40-50% chance of decreasing my Networth by 50%? It sounds like a risky investment for me.
You should never have children either. They are always a cost center.
Cohabiting with someone of less wealth is a financially losing proposition too. So live alone or find someone with more wealth than you.
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Re: Financial upside / downside of marriage vs cohabiting
Of course, not disagreeing with you.JoeRetire wrote: ↑Tue Jul 31, 2018 7:01 amI said "should never". I stand by what I wrote.Grt2bOutdoors wrote: ↑Tue Jul 31, 2018 6:51 amToo late, the child is on the way.JoeRetire wrote: ↑Tue Jul 31, 2018 6:44 amAnyone who sums the situation up as "a risky investment" should never marry.longterm100 wrote: ↑Mon Jul 30, 2018 7:54 pmTo sum up, marrying has a 40-50% chance of decreasing my Networth by 50%? It sounds like a risky investment for me.
You should never have children either. They are always a cost center.
Cohabiting with someone of less wealth is a financially losing proposition too. So live alone or find someone with more wealth than you.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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Re: Financial upside / downside of marriage vs cohabiting
Check your state laws (they may vary), but child support is usually statutory and based on the combined salaries of the parents. If you are wealthy, the amount to support your child is higher. Once the amount "necessary" is determined, it is allocated to the parents based on their percentage of salary. I.e. If the court says your child needs $5,000 per month based on the statutory tables and you earn 80% of the combined parental income, you will need to pay the mom (assuming the child lives with the mom) $4,000 every month. You can't do things like buy the child's school clothes and deduct it from the $4,000. If you buy them anything, it's in addition to the $4,000. I always thought the way child support was calculated, without considering the facts of that specific family, made no sense.
Anyway, my point is that if you are divorcing with children, child support is automatically decided by the court based on the statutory guidelines as part of the divorce proceedings. If you are not married and separate, you can agree among yourselves what is the appropriate amount and how it should be paid. That doesn't mean you don't have to pay a reasonable amount, she can still take you to court and get it set by statute if you can't agree, but at least you all have the opportunity to decide for yourselves if you aren't married.
Anyway, my point is that if you are divorcing with children, child support is automatically decided by the court based on the statutory guidelines as part of the divorce proceedings. If you are not married and separate, you can agree among yourselves what is the appropriate amount and how it should be paid. That doesn't mean you don't have to pay a reasonable amount, she can still take you to court and get it set by statute if you can't agree, but at least you all have the opportunity to decide for yourselves if you aren't married.
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Re: Financial upside / downside of marriage vs cohabiting
Along with what others have said (especially in terms of commitment towards your child and spouse) some other upsides are:
1. Income potential. I was the breadwinner when we got married but my wife quickly climbed the corporate ladder and now makes 400% more. I no longer need to work another day in my life
2. Simplicity. Much easier to keep everything in one checking account than to separate all expenses.
1. Income potential. I was the breadwinner when we got married but my wife quickly climbed the corporate ladder and now makes 400% more. I no longer need to work another day in my life
2. Simplicity. Much easier to keep everything in one checking account than to separate all expenses.
Re: Financial upside / downside of marriage vs cohabiting
You can have a marriage without commitment
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or you can have
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Commitment without marriage
IMO, marriage is a somewhat outdated institution. It's easy to get married and difficult and painful to get divorced. The whole fairy tail "til death do us part" is actually "until one of us changes our mind".
When you have a child with someone, you will be connected emotionally and financially to that person for the rest of your life - married or not. You are making a lifelong commitment to that person.
The comments here (including mine!) don't matter. All that matters is what you and your partner desire. If you are both happy with your current arrangement, then keep it as is. If she's pressuring you to get married, I would be concerned. Talk to your partner.
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or you can have
.
Commitment without marriage
IMO, marriage is a somewhat outdated institution. It's easy to get married and difficult and painful to get divorced. The whole fairy tail "til death do us part" is actually "until one of us changes our mind".
When you have a child with someone, you will be connected emotionally and financially to that person for the rest of your life - married or not. You are making a lifelong commitment to that person.
The comments here (including mine!) don't matter. All that matters is what you and your partner desire. If you are both happy with your current arrangement, then keep it as is. If she's pressuring you to get married, I would be concerned. Talk to your partner.
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Re: Financial upside / downside of marriage vs cohabiting
It seems like you've been stringing along your fiancee for the last four years with the promise of marriage, and are now having a kid but don't really want to get married and just see risks. You should be honest with your fiancee if you decide that you are never going to get married so she can also decide whether she wants to stay with you in that case or look for someone who would commit to her.bottlecap wrote: ↑Tue Jul 31, 2018 6:40 am
You also made a promise to get married and presumably your SO stayed with you on that promise. Otherwise, why did you agree to the charade of engagement?
If you feel there is some benefit to you to get married, then get a prenup and get married. At least see a lawyer to see what your options are. You may be agreeable to some of them.
It would be unethical to keep promising the eventual future of marriage to SO if you decide that you actually don't want to be married. There's a definite risk on her side of being in a long term relationship as the lower earning spouse and taking care of a kid when you aren't married that you'll eventually be kicked to the curb with little to show for the years together.
Re: Financial upside / downside of marriage vs cohabiting
The child really does change everything. You'll find that navigating the world of children (dealing with schools, dealing with doctors, etc.) is just easier when you're a married couple.
Re: Financial upside / downside of marriage vs cohabiting
Yep. OP was thinking of divorce as costing 50% of net worth. My goal was to point out that life as a married couple has plenty of other similar risks (like a child born with severe disability, or an accident) and he'd be well served to think less about how to avoid the risk and more about how to face it together.
Re: Financial upside / downside of marriage vs cohabiting
Though a family history of divorce would certainly sensitize someone to the many negatives associated with it, there are associations between a history of divorce in a family and an increased probability of divorce for future generations of that family. Without attempting to detail studies for why that exists, it is significant to acknowledge that marriage, like investing, has no guaranteed outcome. We make our best analysis and move in accordance with our level of risk aversion which can be overly or less averse than supported by a careful analysis. The greatest risk in a marriage would be to overly focus on potential negatives. In short, just as we obtain financial education, it can be of great benefit to investigate the benefits of marriage vs. cohabitation fully rather than from a limited context. A few sessions with a competent therapist could lead to an overall analysis of your relationship, and this site can provide information relevant to your question in an isolated area. Best of luck with your upcoming change and entry into parenting. It will also change things forever from a financial perspective, among others
Tim
Tim
Re: Financial upside / downside of marriage vs cohabiting
Wow, I had to read this post twice. You aren't even married and you are thinking about divorce as an option. You don't live like a married couple, sorry. The marriage license is a binding contract (how else can you divide assets). If you can't commit to a binding contract, you shouldn't be in business. I call children the great equalizer of life, you find out what's really important. I've got an idea, why don't you work at being a good husband and father and go from there. Nothing is guaranteed in life.
Re: Financial upside / downside of marriage vs cohabiting
Gotcha, that makes sense... lots of sense.Tamarind wrote: ↑Tue Jul 31, 2018 7:47 amYep. OP was thinking of divorce as costing 50% of net worth. My goal was to point out that life as a married couple has plenty of other similar risks (like a child born with severe disability, or an accident) and he'd be well served to think less about how to avoid the risk and more about how to face it together.
Re: Financial upside / downside of marriage vs cohabiting
As much as I detest the entire concept of alimony, I will admit that so long as the spouse works and earns an income in the ballpark of your own, your risk of being stuck paying alimony is relatively low. However, if the spouse earns a low wage and you are a high paid professional, or even worse, your spouse stays home right off the bat or quits a high paying job to stay home for years, you are pretty much screwed in many states in terms of paying alimony.
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Re: Financial upside / downside of marriage vs cohabiting
OP,
Lets suppose cohabiting turns out to be a better option for you financially. You may pursue that and limit your partner's access to this area, since you bring more to the relationship here (you have higher income, higher NW). But what about other areas of the relationship where your spouse may be bringing in more than you? What would your feelings be if your partner tries to limit your access in those areas of the relationship? Point is, in my view, you get the whole package in a relationship and it won't be right to look at finances in isolation.
Lets suppose cohabiting turns out to be a better option for you financially. You may pursue that and limit your partner's access to this area, since you bring more to the relationship here (you have higher income, higher NW). But what about other areas of the relationship where your spouse may be bringing in more than you? What would your feelings be if your partner tries to limit your access in those areas of the relationship? Point is, in my view, you get the whole package in a relationship and it won't be right to look at finances in isolation.
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Re: Financial upside / downside of marriage vs cohabiting
Divorce rate is overstated. For first marriages of college-educated women, the divorce rate is only 20%, and has been steadily decreasing since the 1980s. One of the single biggest things impacting divorce rates is money (and not having enough of it). Are you and your significant other college-educated and have either of you been married before? The divorce rate is skewed because for 2nd and subsequent marriages, the divorce rates is quite a bit higher than 50%. It seems that a lot of people are "serial divorcees".longterm100 wrote: ↑Mon Jul 30, 2018 7:54 pm I've been engaged for 4 years and we are having a child at the end of this year. I earn significantly more then my spouse an have 10x network. Live in MA. Knowing that 42-45% of marriages end in divorce (google 2018 divorce stats), my parents are divorced and 2 out of 7 of my close friends are divorced (2 of them are cohabiting and not married) I'm looking at my financial health moving forward under 3 scenarios...
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Re: Financial upside / downside of marriage vs cohabiting
In addition to everything else mentioned also look at health care costs. Using one of your company's "family plan" may save you significantly versus paying for separate plans. Unless of course you can take advantage of this in MA while cohabiting.
As others mentioned- look more closely at the stats.
As others mentioned- look more closely at the stats.
Re: Financial upside / downside of marriage vs cohabiting
Love is an emotion. Marriage is a contract so treat it as one. There are those who say that the divorce stats are skewed, implying that marital utopia is far more prominent than said stats reveal. I submit that there are quite a number of marriages that are mediocre at best but the parties involved don't divorce for varying reasons, (economics, pride, peer/family pressure, religion etc.).
Your particular relationship is unique to you and so you must seek your own comfort level. My parents technically were married until one of them died. The stats show that they never got divorced, even though they were separated, did not speak to one another for more than 5 years & were not allowed to be in the same nursing home as their doctors determined it would have been too disruptive.
I have been with my GF for 20 years. We get along better than many married couples that I know. Each of us knows that the other can walk at a moments notice so it keeps the communication channel open. It also allows for two strong willed personalities to manage many activities, (especially finance), in our own way without the marriage contract issues. There are no common children involved so that does make a difference. We both have careers so that likely helps as well. I'm not sure that marriage would work for us.
Bear in mind that some people are generally stable throughout their lives and others change wildly. The snapshot of your relationship today may look nothing like that 5, 10 or 25 years from now. There is a great difference in risk financially between young people with nothing to lose and those in middle age and older. The presence of children does change many things and that bell cannot be unrung. Children can often change the personality of the parents. Also consider the impact of in-laws now that a child is in the mix.
Good luck.
Your particular relationship is unique to you and so you must seek your own comfort level. My parents technically were married until one of them died. The stats show that they never got divorced, even though they were separated, did not speak to one another for more than 5 years & were not allowed to be in the same nursing home as their doctors determined it would have been too disruptive.
I have been with my GF for 20 years. We get along better than many married couples that I know. Each of us knows that the other can walk at a moments notice so it keeps the communication channel open. It also allows for two strong willed personalities to manage many activities, (especially finance), in our own way without the marriage contract issues. There are no common children involved so that does make a difference. We both have careers so that likely helps as well. I'm not sure that marriage would work for us.
Bear in mind that some people are generally stable throughout their lives and others change wildly. The snapshot of your relationship today may look nothing like that 5, 10 or 25 years from now. There is a great difference in risk financially between young people with nothing to lose and those in middle age and older. The presence of children does change many things and that bell cannot be unrung. Children can often change the personality of the parents. Also consider the impact of in-laws now that a child is in the mix.
Good luck.
Re: Financial upside / downside of marriage vs cohabiting
15% is way low. For those with bachelor's degrees, 30% of first marriages ended in divorce by age 46: https://www.bls.gov/opub/mlr/2013/artic ... inment.htm. Lifetime rates of divorce would be higher than the 30% number, as many people divorce after 46.
Re: Financial upside / downside of marriage vs cohabiting
^ This is true.JoeRetire wrote: ↑Tue Jul 31, 2018 6:44 amAnyone who sums the situation up as "a risky investment" should never marry.longterm100 wrote: ↑Mon Jul 30, 2018 7:54 pmTo sum up, marrying has a 40-50% chance of decreasing my Networth by 50%? It sounds like a risky investment for me.
You should never have children either. They are always a cost center.
Cohabiting with someone of less wealth is a financially losing proposition too. So live alone or find someone with more wealth than you.
Whether you co-habiting or married, it should be treated as a partnership with 50/50 shares. A pre-nup that heavily favors one side will not be honored in court. "Whatever mine is yours" holds true in marriage. Be aware of common law marriage. It might not apply to MA, but it is for several other states.
If I may suggest: you work hard and build your net worth to 200% of whatever goal you have. Then, if anything happens, you'd still get 100% net worth.
Time is the ultimate currency.
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Re: Financial upside / downside of marriage vs cohabiting
I've been single. I've been married. I've been divorced. I've paid alimony. I've paid child support. I now have grandchildren. My advice is: figure this stuff out before you get involved with a person of the opposite sex, not after a child is on the way. It's too late now, so do the right thing. Your child and your child's mother are more important than your financial health.
Re: Financial upside / downside of marriage vs cohabiting
GMacD wrote: ↑Tue Jul 31, 2018 5:40 pm Love is an emotion. Marriage is a contract so treat it as one. There are those who say that the divorce stats are skewed, implying that marital utopia is far more prominent than said stats reveal. I submit that there are quite a number of marriages that are mediocre at best but the parties involved don't divorce for varying reasons, (economics, pride, peer/family pressure, religion etc.).
Your particular relationship is unique to you and so you must seek your own comfort level. My parents technically were married until one of them died. The stats show that they never got divorced, even though they were separated, did not speak to one another for more than 5 years & were not allowed to be in the same nursing home as their doctors determined it would have been too disruptive.
I have been with my GF for 20 years. We get along better than many married couples that I know. Each of us knows that the other can walk at a moments notice so it keeps the communication channel open. It also allows for two strong willed personalities to manage many activities, (especially finance), in our own way without the marriage contract issues. There are no common children involved so that does make a difference. We both have careers so that likely helps as well. I'm not sure that marriage would work for us.
Bear in mind that some people are generally stable throughout their lives and others change wildly. The snapshot of your relationship today may look nothing like that 5, 10 or 25 years from now. There is a great difference in risk financially between young people with nothing to lose and those in middle age and older. The presence of children does change many things and that bell cannot be unrung. Children can often change the personality of the parents. Also consider the impact of in-laws now that a child is in the mix.
Good luck.
Which poster implied that non-divorce somehow indicates a marriage utopia? I saw nothing like that. We all know that the happiness of marriages exists on a continuum from abusive to meeting all of each party’s needs.
Posters, including me, were simply stating that if the OP is going to use math to determine his decision about marriage then he’d better get his numbers right.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
Re: Financial upside / downside of marriage vs cohabiting
Sorry, but that part is incorrect.
A well-written prenup, understood, agreed to, and signed by both parties will hold up in court.
This isn't just my wallet. It's an organizer, a memory and an old friend.