Piershale: Marriage may be better for retirement

Common law marriages are not legal in Illinois. So if you've been living with someone for a long time and you are close to retirement, here are some powerful financial reasons to tie the knot and make it legal.  

If you are married, you can roll your deceased partners IRA over to your own IRA and delay required taxable distributions until you are age 70 and a half. If you're not married, you have to transfer your deceased partners IRA to the less tax favorable inherited IRA, where you have forced taxable distributions immediately, regardless of your age. This can cost you a lot more in taxes, especially if you are a few years away from age 70 and a half.

If you're married, federal law requires that your partner’s monthly pension benefit must be set up where at least 50% or more of it continues to you for the rest of your life if they pass away first.  If you're not married, you get nothing. 
If you're married and your partner passes away, you get 100% of their Social Security which could be a huge benefit, if it's larger than your own Social Security. If you're not married, you can only take your own benefit even if it's a lot smaller. 

If you’re married you can put $6,500 into a traditional IRA from age 50 up to age 70, if you're not working, based on the earned income of your partner. If you're not married and you are not working you can’t buy an IRA even if your partner has earned income.

If you are a wealthy couple, there may be a big reason to tie the knot. If you are married you have the advantage of portability which could save huge amounts in death tax.

Portability allows a wealthy married couple to combine their individual $5,490,000 death tax exemptions into one $10,980,000 death tax exemption. 

For example, Michael dies and leaves $1,000,000 to his children and the balance of his estate to his wife, Margaret. The $1,000,000 left to his kids reduces his $5,490,000 death tax exemption to $4,490,000, which through portability can be transferred to Margaret, giving her a total estate death tax exemption of $9,980,000 ($4,490,000 + $5,490,000).

If Margaret dies later that year, she could leave $9,980,000 of her estate to her heirs without any federal death tax. 

If they were not married, Michael's unused portion of his exemption, which in this example is $4,490,000, could not transfer to Margaret and it would be wasted.  If the estate was large enough, this could potentially cost the heirs as much as $1,796,000 in death tax just because the couple was not married. (Yikes…honey will you marry me)

Remember that old song by the Fifth Dimension, "Am I ever going to hear my wedding bells?" While love will hopefully be a big motivator, sound financial reasons for marriage might give some additional incentive to encourage your honey to say “I do.”

• Mike Piershale, ChFC®, RFC®  is President of Piershale Financial Group. If you have financial questions on this column contact us at Piershale Financial Group, Inc., 407 Congress Parkway, Crystal Lake, IL 60014. You may also email

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