There are pluses and minuses either way from a financial perspective, says Debra Greenberg, director, Investment Solutions & Personal Retirement, Bank of America. “The key is to make sure that you’ve familiarized yourself with the rules governing such things as Social Security, estate planning and health insurance as they apply to your situation.”
Here are several issues to consider. “Talking them over before you walk down the aisle can help make the journey ahead much smoother,” Greenberg says.
For richer, for poorer…
The first and most basic question is whether you want to combine your financial assets and estate plans. For older couples who plan to remarry, a prenuptial agreement can be a particularly useful tool that spells out what belongs to whom and how those assets will pass to heirs and beneficiaries. “A prenup can help ensure that both parties don’t lose control of the assets they brought to the marriage,” Greenberg says.
Deciding what to do with assets accumulated during the marriage is another issue that a prenup can help you control. Some states treat anything acquired by a married couple as community property, so your prenup should include a plan for dividing jointly held assets in the event of a death or a divorce. Work with a lawyer and a financial advisor to draft a prenup that addresses all of your needs and concerns. For couples who choose not to marry, a cohabitation agreement can provide some of the same protections.
When it comes to weighing the financial aspects of remarriage, another often confusing area is Social Security. It’s important to understand how a remarriage can affect what you’ll receive, Greenberg says. As just one example, if your first marriage lasted 10 years or longer, you’ve been divorced for two years, you are single and your former spouse is eligible to collect benefits, you’re allowed to collect reduced spousal benefits based on their earnings record as early as age 62 or full spousal benefits at full retirement age (age 65-67 based on your date of birth). If you remarry, your spousal benefit would be based on your new spouse’s earnings record, which could result in a higher or lower spousal benefit.
It is also important to consider the impact of marriage on survivor benefits. Individuals who remarry before age 60 (age 50 if disabled) should keep in mind that they stand to lose their future survivor benefits from their prior marriage. “Because there are so many factors to be weighed, you should check with the Social Security Administration to ensure that you are receiving the highest benefit possible,” Greenberg says.
In sickness and in health…
If one partner lacks good health insurance, getting married can provide the opportunity to sign up for spousal coverage, Greenberg says. And even if both of you have insurance, it may be possible for married couples to get a better rate.
The key health issue that every older couple should consider, though, is the impact that a prolonged illness or an injury could have on their savings, Greenberg says. More than half of all Americans will eventually require some form of long-term care, and most insurance plans, such as Medicare, limit coverage of such things as residence in a nursing home. “That’s why, at this age, it’s more important than ever to have a plan to prepare for a health crisis,” she says.