The Financial Perks of Growing Old Together

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By Mitch Adel
Spring is definitely upon us, and it isn’t just the young folks who are feeling amorous. Love is in the air, but many of us don’t realize its benefits go far beyond the psychological—particularly for seniors.
The financial benefits of marriage are well documented, but the fact is that seniors might actually benefit more in some areas than any other age demographic.Aside from the obvious advantages of sharing your heart and your bank account with a spouse (splitting the cost of things like rent or a mortgage and enjoying the financial stability and reduced risk that comes from two incomes) there are a number of specific ways that seniors can benefit from making a love connection.

Credit where credit is due

Because married couples have the advantage of two credit scores to work with, they can be more strategic in making significant purchases. Simply using the better credit score to make larger purchases (buying a house, for example) can have a positive financial impact: Even a relatively modest difference in credit scores can save tens of thousands of dollars in interest payments—money that can be directed toward your retirement.

An abundance of options

Retirement income options for married couples are also more diverse and financially favorable. One popular strategy that is available for couples is the “spousal switch”: electing to receive half of your spouse’s Social Security benefit as soon as they become eligible, and then switching to your own full benefit once you reach the age of 70 and maximum benefits kick in. By waiting until your benefit caps out—and collecting half of your spouse’s benefit in the interim—you can increase your monthly Social Security check by nearly $500. Similar strategies apply to widows and widowers, and this “juggling” of Social Security benefits can also help to maximize your benefits in circumstances where one spouse earns significantly more than another. It is also worth noting that it isn’t just married couples who may be able to take advantage of Social Security benefits: many states recognize common-law marriage status for couples that meet certain criteria (such as living together and filing taxes jointly), and the Social Security Administration recognizes those state-sanctioned unions.

It’s better to give…

In contrast with the $14,000 annual gift limit that applies to financial gifts between most individuals (above which a gift tax form must be filed and tax penalties may apply) spouses can gift each other any sum of money they choose.This is a small—but important—perk that can be very useful with multiple aspects of financial and estate planning.

With longer life expectancies, the financial pressures for seniors are more significant than ever. Higher medical expenses, largely driven by the skyrocketing costs of assisted living, in-home care and other specialized forms of health care, are making long-term financial planning more important than ever. At the same time, more couples over the age of 65 are getting hitched than ever before: nearly half a million American seniors are marrying every year.

On the other hand…

Before you tie the knot, there are critical issues you should discuss with your spouse-to-be that can affect your pocket book as well as your peace of mind.You should consider consulting with your elder law attorney and financial advisors to make sure you have all the bases covered.

The bottom line is this: whether you are newly married or have been together for decades, understanding how to make your relationship work for you and become a net economic positive is an important piece of the financial puzzle for seniors. Because, after all, what could be more romantic than a long, comfortable and financially secure retirement together?

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