Stable marriages involve many different factors. Love, companionship, loyalty, children, growing together, and intimacy are just some of the many reasons people stay together.
Finances are another important factor, and they can make – or break – a marriage. Today, we want to look at why unstable finances can keep unhappy couples together, and why sometimes they’re the impetus for a divorce.
What are some of the financial reasons spouses stay married?
There are many financial reasons spouses may stay married – even though, emotionally, the marriage is over. Often, these couples end up living parallel lives within their homes, since it just doesn’t make sense financially to split up.
Financial burdens of homeownership, bills, and other costs of living
The benefit of staying in the same home is that you and your spouse only have one set of house payments. If one of you stays in the home, then you’ll both have to pay for the house payments and the cost of a new apartment or home. Many couples choose to stay together simply because they cannot afford to move out. One household may mean the ability to continue pooling resources for:
- Car loans
- Joint credit cards
- Utility bills
- Education expenses
- Childcare expenses
It is worth noting that spouses generally have more protection from creditors. If property is jointly owned, then if a creditor obtains a judgment against just one spouse, the creditor can’t seize any property owned by both spouses – as long as the other spouse isn’t liable, too.
Social Security benefits
One spouse is normally entitled to more Social Security than the other spouse based on their earnings history. The Social Security Administration helps spouses in long-term marriages by giving the spouse with lower benefits the right to claim her/his spouse’s higher benefit payment, provided certain conditions are met:
- The spouses must have been married for 10 years or more.
- The spouse entitled to a lower Social Security payments waits until she/he is 62 to claim benefits
- The spouse entitled to the lower Social Security payment can claim 50% (1/2) of her/his spouse’s retirement benefit amount.
Spouses who have been married for less than 10 years may agree to stay married until the 10-year period has been met, so the spouse entitled to the lower amount can claim half of the other spouse’s higher amount. Another consideration is that Social Security payments increase for people between 62 and 70.
Health insurance benefits
Many spouses who have insurance through their employer can include their spouse on the employment insurance policy. When spouses divorce, the employer is generally not required to cover the former spouse, with the exception of the spouse’s right to claim additional coverage through COBRA for a limited time (and provided the premiums are current). Spouses need to check to make sure the employer will cover a spouse who is separated from the spouse who works for the employer.
There may be federal tax benefits to staying married. There are IRS laws and other laws that govern tax deductions and tax credits for children and for the payment of alimony. There may be other tax advantages such as saving on federal estate taxes.
Staying together may make more sense if you and your spouse run a business together. It may be easier to stay married than to decide who will own the business, who will run the business, and other business considerations. This may be especially important if there are shareholders, or if the company’s stocks could be affected by a divorce.
What are some of the financial reasons spouses divorce?
Financial conflicts are a primary reason spouses divorce. Spouses may consider a divorce if:
- One spouse isn’t earning his/her fair share.