Millions of seniors rely on Social Security for a substantial portion of their retirement income. If you qualify, your Social Security benefits are based on either your own earnings record or the earnings record of your current or former spouse. Because your spouse's earnings record can impact your benefit levels, many people who find their second loves later in life believe that they'd be better off financially if they don't get married.
Occasionally, that's because of the way Social Security treats second marriages from a raw benefits perspective, but there are often other factors at play as well. No matter your personal circumstances, you'll want to understand how Social Security treats your second marriage if you rely on the program for a big part of your retirement income.
Love and remarriage (or not)
If you are eligible to receive Social Security, you generally can collect based on half the benefit level your spouse earned or the full benefit level you yourself earned. If your spouse passed away, you may be eligible to receive as much as 100% of your deceased spouse's Social Security benefit. If you're divorced but were married to your ex-spouse for at least 10 years, you can claim spousal benefits.
Those rules are straightforward if you only marry once -- but if you choose to marry a second time, things get a bit more complicated. You're always allowed to claim Social Security on your own earning record, but you're only allowed to claim spousal benefits on one of your spouse's records.
If your first marriage ended in divorce, or your second marriage took place before you reached age 60, then your spousal benefit level is based on your new spouse's earnings record. So, in those cases, it's possible for a couple to have higher Social Security benefits if they live together without getting married than if they do tie the knot.
If, on the other hand, your first marriage meets all of the following qualifications:
- Lasted at least 10 years
- Ended in your spouse's death (or if your ex-spouse later passed away)
- your second marriage didn't take place until you reached at least age 60 (50 if disabled)
...then you can still claim widow's benefits on your first spouse, even if you remarry.
Of course, if your spousal benefits from your second spouse are higher than what you'd get based on your first spouse's earnings record, you can claim that higher benefit level.
Another factor that couples contemplating marriage need to consider is that their Social Security checks may be subject to taxes. Whether you're married or not makes a big difference as to what income levels taxes on Social Security benefits start. It's possible for a couple living together to pay less in taxes on the same Social Security income than they'd pay if they were married.
Sometimes, you're better off wed
While those concerns over Social Security income reductions may keep seniors from their second pass at tying the knot, there are still reasons to take that plunge.
For one thing, married couples can give gifts of unlimited size to one another, while unmarried couples start to have to file gift tax paperwork for gifts above $14,000 within a year. For another, when a member of a married couple passes away, his or her spouse has better options when it comes to how to treat retirement accounts than an unmarried beneficiary would.
Additionally, for couples that have substantial income differences, the tax benefits that come from being married and filing jointly may outweigh any hits that come from changes to their Social Security. Unfortunately, the interaction between other income, Social Security, and tax rates can get quite complicated. If you find yourself considering a second marriage later in life, you'll have to run your own numbers based on your situation to find out the total financial impact to you.
Don't let money get in the way of falling in love again
If you find love again later in life, it can be a wonderful thing. Marriage may or may not make financial sense for you, but unless getting married would cut your combined income below where you could make ends meet, don't let money make the decision for you. Enjoying your golden years with your spouse can bring benefits that go far beyond the dollars and cents. Let the money make the difference in your decision only if you have to -- otherwise, let the other factors drive your choice.