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When it pays to stay single
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Garrett also warns couples not to forget about how tying the knot could affect private-sector benefits.

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"Fewer people get traditional pensions nowadays, but folks who are now retired historically had a pension. There are a lot of widows out there who have their husbands' pensions. If they remarry, they may lose that pension income. Most seniors know this, but what they don't think about is health coverage, a big issue now. If you're getting health benefits from a deceased spouse's coverage, you could lose that, too."

This is not always the case, however. It's best to check with the pension plan administrator to determine if tying the knot would result in a loss of pension or health-care benefits.

"I really hate that people would choose not to get married if they really want to because of financial issues," says Garrett, "but at least know what you're getting into."

Older couples who are depending primarily on federal medical coverage also need to assess their marital or nonmarital situation carefully.

"One of the reasons to get married is to share benefits if you're older," says Farber. "But the flip side is that you'll then be subject to the Medicaid claims thereafter."

For example, say you have a house in your name only. If you're married and your spouse goes into a nursing home, Medicaid will want to tap your home, assuming there are no other assets to pay for nursing-home costs, to recoup its expenses, says Farber. "If you're not married, you remove the house from that exposure.

"When you have one spouse that's going to be on Medicaid and the non-Medicaid spouse is the homeowner, it makes sense to not be married at that point," he says. "I've heard of situations where people even get divorced to prevent exposure of assets they acquired together as a married couple from being subject to claims in this situation."

Taxes and the unmarried couple
By now, almost every taxpayer knows about the marriage tax penalty. This tax rate quirk generally affects a couple when both earn roughly the same amount.

"The marriage penalty has been minimized greatly from what it used to be," says Garrett, "but it still exists, especially for people who both make a lot of money."

And unless Congress takes action to extend the marriage tax relief, the penalty will return in full force in 2011. Meanwhile, even with the temporary tax relief for married couples, there are other tax situations where being single is more fiscally rewarding.

The tax code is fraught with phaseouts and restrictions. "For example, the Roth IRA contribution limit for married couples is higher but not double that of two singles," says Farber. "If you're single and make between $95,000 and $110,000, you can contribute to an account. If you're married, you can contribute if you make between $150,000 and $160,000.

"If each individual earns $90,000, each can contribute up to the limit unless they are married. By being married, their joint income will be taken into account and neither can contribute to a Roth because it exceeds the limit."

Married couples also could face higher tax costs than living-together counterparts if they own rental real estate.

"Write-offs from rental real estate can be used to offset ordinary income unless your adjusted gross income exceeds $150,000," says Hobbs. "And that limit is the same, whether you're married or single.

 
 
Next: Then there are the kids.
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 RESOURCES
Unmarried couples, special considerations
Love, honor and pay the marriage tax
Smart financial moves for newlyweds
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