How Does Marriage Affect Your Retirement Plans?

Learn how tying the knot impacts benefits, too

Fact checked by Suzanne Kvilhaug
Reviewed by Samantha Silberstein

Marriage is about so much more than a wedding. While you daydream about your future home, family, and trips, it’s also a great time to discuss what you want your retirement to look like and how you will achieve that vision.

According to the U.S. Census Bureau, the median age for a first marriage is 30.5 for men and 28.6 for women. This data means that many of today’s couples are entering wedded life with some working years under their belts and perhaps some prior retirement savings and/or debt.

Given these realities and your desires to realize your dreams, it’s important to consider how the financial changes accompanying marriage may affect your retirement planning. 

Key Takeaways

• Marriage can significantly impact existing retirement plans, eligibility for survivor benefits, and access to spousal retirement benefits.
• It’s crucial to manage retirement savings as a married couple, because joint financial planning and shared expenses can affect retirement savings goals.
• It’s best to regularly review and update your retirement plans after marriage and any other life changes it might bring.
• Divorce can affect the division of retirement assets, based on how much you contributed to your accounts while married.

Marriage’s Impact on Retirement Savings

Combining finances is one of the most complex parts of joining lives with a significant other, especially, as ICOM Advisors’ Erin Willcutt said, “…a lot of couples today bring debt to the marriage. That puts automatic strain on the relationship.”

Navigating this past and current strain while keeping an eye on the future is where things can get complicated. But there are ways to make the transition to combined finances easier, and it starts with talking openly and honestly with each other.

“Communication remains a key aspect of a solid partnership,” says Jenica Bertalan, a financial advisor at Edward Jones. “That doesn’t change after saying ‘I do.'”

Couples should discuss their current financial status, future financial goals, and general attitudes toward money before walking down the aisle.  Opening these lines of communication early lays a solid groundwork for future conversations and keeps them from feeling awkward, according to Bertalan.

Important

If you haven’t been having these conversations regularly, now is the time to start.

Some of the biggest hurdles couples face in retirement planning are accurately considering their budget, spending habits, individual risk tolerances, and overall goals. It is tough to make a plan you can stick with as a couple if one of you is a saver and the other is a spender, or if you disagree on how to spend your money. Budgets are a great starting point for opening those lines of financial communication with your spouse.

“Many couples have never made a household budget, so when they combine accounts and start paying bills, much of the nonessential spending comes to light,” Willcutt says. Reducing nonessential spending can help you redirect money to future retirement savings. Still, it’s a good idea for each spouse to retain some nonessential spending money, Willcutt says, as that’s likely to help make the budget stick.

It’s also critical to discuss how having children, if that’s your intention, will alter your financial planning. Will one of you be willing to step away from a career to stay at home if child care expenses are prohibitively expensive or there are other needs? Doing so would reduce your working income as a couple, and the unemployed spouse couldn’t contribute to an employer plan. You’ll also need to figure out how to balance saving for college vs. saving for retirement.

Again, openly discussing these subjects will help you, as a married team, to get on the same page. If you need help starting this conversation, a financial advisor can help you.

Questions to Ask Your Future or Current Spouse About Retirement

• At what age would you like to retire, and what does your retirement look like?
• Do you have any current retirement savings through an employer-sponsored plan, an individual retirement plan, or both?
• What are your attitudes toward spending vs. saving?
• What are your savings priorities?
• Are you open to including a financial advisor in our retirement planning?

Marriage’s Impact on Social Security and Survivor Benefits

One of the first things married couples should do after signing on the dotted line is update beneficiaries on their current retirement accounts, whether those are work accounts, individual accounts held at a broker-dealer, or both.

Marriage has little impact on your own Social Security benefits. You will not need to halve your benefits with your spouse or wait longer to receive benefits when you reach retirement age.

As long as you have enough credits to qualify for Social Security benefits, your wage and employment history alone determine your Social Security benefit.

Still, married people have more options when it comes to applying for benefits. For example, if one spouse earned more, and therefore will get a higher benefit, the other spouse can receive benefits up to 50% of that higher amount, if it’s more than their own. Also, spouses without enough credits to qualify for Social Security benefits can get up to half of their spouse’s benefit, starting at age 62.

Defined benefit plans or pensions are just one example of retirement plans that typically have a spousal benefit. 401(k)s, defined contribution plans, and other retirement plans have survivors benefits, too.

Note

Federal law requires that a spouse be the primary beneficiary on any employer-sponsored plans, which ensures that the funds existing in your retirement plan get paid to your spouse upon your death.

Divorce and Retirement Plans

Any retirement contributions you made before marriage are yours and yours alone in the event of a divorce. However, contributions you make during your marriage, even to an individual account, are considered marital assets.

Matching funds that your employer contributes to your 401(k) as part of your overall compensation are marital assets, too. During divorce proceedings, a judge will decide how much, if any, of your retirement assets acquired after marriage are split.

If you’re not yet married and have considerable assets, you might consider a prenuptial agreement. Any legal agreements made before the marriage about the division of assets and property, even those acquired during a marriage, can prevent a judge from later ruling to split those assets.

Fortunately, divorce has no impact on your Social Security benefit unless, as noted above, it is less than your ex-spouse’s benefit.

A marriage lasting 10 years or more entitles an ex-spouse who is age 62 or older, hasn’t remarried, and will receive a lower benefit than you to file for Social Security benefits under their former spouse’s record. However, even if the Social Security Administration (SSA) awards benefits to an ex-spouse, there is no impact on the amount of your benefits.

If you are considering divorce, meet with a financial advisor right away if possible. Planning to move forward financially after divorce is a process best started early.

Updating Retirement Plans 

Retirement plans are not a set-it-and-forget-it endeavor. Each new baby, new job, new house, and new dream can affect how much you’ll need in retirement, when you’ll need it, and how you plan to use it. Finance professionals are the right people to help you make a plan, stick to it, and update it when necessary.

Most financial advisors want to see clients at least once a year to check in with them, Willcutt says. Doing so will help you see your whole financial picture and get the most bang for your buck. A good financial advisor will want to make sure you can meet your goals while considering all of your available assets.

If there is a change in your marital status, your financial advisor is the expert to walk you through any financial adjustments to make. And your employer’s human resources department should be able to put you in contact with the person or organization that updates information on your work retirement plan.

Unless you plan to change your name, there is no requirement to tell the Social Security Administration about your marriage or divorce unless you are actively receiving benefits. When you are ready to file for Social Security benefits or need to apply for disability benefits, contact the SSA with the appropriate information, and they will take it from there.

If you’re a millennial with your eyes on retirement, there are many resources that can help you plan your financial future.

How Does Marriage Affect Retirement Benefits?

Marriage will not reduce Social Security benefits but could improve your retirement income overall. Even if spouses do not have enough credit to qualify on their own, they may be eligible to receive benefits if they’re receiving disability or retirement benefits. These benefits won’t impact your benefits but may increase retirement income and help you decide when retirement is right for you.

Does My Ex-Spouse Still Get Half of My Retirement if They Remarry?

It depends on your marriage and divorce conditions, your state’s laws, and the judge’s ruling regarding your retirement accounts and plans.

How Many Years Do You Have to Be Married to Get Your Spouse’s Pension?

It depends on the type of pension, how long you have been married (and/or divorced), state laws, your income, and much more. It’s best to speak to an attorney or financial advisor familiar with pension plan laws.

The Bottom Line

Marriage is an exciting milestone that brings two people together to form a family and intertwines financial futures. Couples should consider marriage’s impact on retirement benefits and any future assets. It is also important, though far less fun, to discuss what happens to retirement assets in the event of a divorce or death.

Couples should continue openly and honestly discussing their financial goals, spending habits, and retirement plans. Plans change, and financial advisors can help keep couples focused on the bigger picture and work together toward their shared dreams.