Valentine’s Day is almost here, and marriage is all the rage. According to the Wedding Report, there will be some 2.5 million weddings this year — the most since 1984.
As an economist, I’m all for it: Marriage beats partnering long-term. I’m no expert on how to meet the love of your life; my goal is to make sure that you barter for a spouse or partner understanding the economic resources and financial obligations that you each bring to the table.
Yes, bartering for love sounds heartless, but it’s on full display on America’s 1,500 dating apps and websites.
I’m not claiming that money is the only deciding factor in pairing up. For most of us, love transcends money.
But we humans have the capacity to fall in love with lots of people. And there’s no shame in targeting your swooning on someone who can provide you with a higher standard of living.
Put it this way: If two people are the same in most respects, except one earns twice as much as the other, don’t flip a coin. Go for the higher earner, and yes, marry for money. You won’t be the first to play the oldest financial trick in the book.
Choosing to marry over partnering long-term may mean somewhat higher net taxes, but it comes with an array of valuable implicit insurance arrangements, which the formality and legality of marriage help enforce.
On top of short-term financial benefits of marrying, like the implicit joining of resources, there are long-term benefits, as well.
First, after just nine months, you’re eligible to collect future widow(er) Social Security benefits. Plus, after one year of marriage, you and your spouse are eligible to collect future spousal benefits. And if you stay married for 10 years, you’re eligible for divorced spousal and divorced widow(er) benefits.
But, to be clear, with the way Social Security’s benefits formulas work, the spousal benefit will be useful only to spouses who earn very little in absolute terms and also earn a lot less than their marital partner.
The widow(er) benefit, on the other hand, can be of tremendous value to the lower-earning spouse (or divorced person), provided the higher-earning spouse (or ex-spouse) dies first.
Marriage can also benefit your long-term standard of living, albeit to a highly imperfect and uncertain extent, if you’re awarded alimony in divorce.
An estimated 41% of all first marriages will end in divorce or separation, according to data from California-based law firm Wilkinson & Finkbeiner. Some 60% of second marriages go south, while 73% of third marriages will start with “forever” and end with “sayonara.”
Yet, we all marry convinced we’ll make it. Economists call this phenomenon “irrational expectations” — when people collectively believe in something they know is collectively false.