In the Atlantic Monthly’s “The High Price of Being Single in America,” authors Lisa Arnold and Christina Campbell argue that, compared to a married woman of the same income, over the course of her lifetime, a single woman could pay an extra $1,022,096 — just for being single.
Yes, you read that right.
What, other than a second income, would the single woman be missing out on? Tax breaks and extra Social Security benefits, plus savings in health and housing costs, for starters.
Then why are married people always complaining about the marriage penalty?
Amazed by this figure, I dug deeper and found out how these differences play out in the lives of real single and married people, both men and women. What I learned is that the calculations are not quite so clear cut.
The married/single tax divide
The Atlantic authors claim that because of laws favoring married couples, a single person earning $40,000 a year pays $6,181 in taxes on that income, while a married individual with the same income pays only $5,162, a savings of more than $1,000 annually.
Those calculations do not mention the “marriage penalty,” in which married couples pay more taxes if their newly combined income pushes them into a higher tax bracket.
After marrying in 2008, Laurie Itkin, of San Diego, began paying more than $20,000 extra in federal and state taxes annually. “My husband jokes that we should get divorced not because he doesn’t love me anymore, but because we experience the so-called ‘marriage penalty’ in filing a joint tax return,” she explained.
The Itkins are victims of the “marriage penalty,” but some couples actually receive the marriage bonus mentioned in the Atlantic. This typically occurs when the income levels of the two spouses are widely disparate. For instance, couples with only one earner almost always enjoy a bonus, because the earner’s income moves into a lower bracket.
Take Greg Davis, of Los Angeles, who got married in 2009; his wife’s work as a tutor did not bring in much money, so they enjoyed the marriage bonus. “I save money on taxes now because when my wife and I combined incomes, we didn’t get pushed into a higher tax bracket and got much better deductions than when we were single,” said Davis.
Of course, whether or not you pay more in taxes depends on an array of factors. You can use Tax Policy Center’s Marriage Bonus and Penalty Tax Calculator to see how marriage would affect your tax payments.
Housing and health insurance costs
While tax breaks may vary from person to person, data show that living costs such as housing and insurance — what we at LearnVest would call "essential expenses" — are almost always higher for singles.
Using averages from the Bureau of Labor Statistics, a single person in his 20s spends about $9,964 on housing, and a married couple the same age averages $8,844. Over 60 years, this can add up to more than $67,200 in savings for a married couple.
Not only do singles pay more in living costs, but they also have to cover their expenses without a spouse to help them. Kimberly Michel, of Columbia, Mo., said, “All of the home expenses fall to me and my one income. If I were married and my husband also worked, my rent and bills on my two-bedroom apartment would be split in half.”
The same pattern emerges for expenditures on health care. Singles spend about $570 per year on health care, while couples average about $963. That comes to $482 per person, far less than their single peers, because of the reduced costs of coverage.
But LearnVest Planning Services certified financial planner Sophia Bera cautions that while most couples can save by being covered by the same plan, you should never assume that's the case. Instead, look at your personal situation and the policies available to you. “Sometimes it’s better for a husband and wife to stay on separate insurance; other times they might benefit from going on a family plan under one spouse’s company,” she says. Still others, she adds, might do better by declining insurance through their employer and instead purchase their own coverage.
Melinda Hurley-Patterson is one such exception to the averages. She faced a higher joint health insurance bill when she married because her husband's job does not cover health insurance. “I now pay an extra $300 per month out of pocket for his medical insurance because neither of our jobs cover his. It’s killing my paycheck,” she says.