Marriage and Wealth

In the book The Difference: How Anyone Can Prosper in Even The Toughest Times, author Jean Chatzky lists some interesting information from a 2006 study published in the Journal of Sociology as follows:

Married individuals had nest eggs 93 percent larger than single or divorced folks. (Divorce is its own wealth negator.) Moreover, married couples saw annual increases in their wealth of 16 percent, double the increase of singles.

So why is this? Chatzky attempts to explain:

In part, that's the cost of living talking -- the impact of economies of scale. It's also because people who are married have reasons beyond themselves to produce. They are working for the betterment of their growing family, with common goals such as paying down debt, buying that first (or larger) home, paying for college education, supporting charities they believe in, retiring comfortably, and eventually passing a chunk of wealth along to their heirs. Married or coupled folks also have, in their partners, built-in sanity checks on their spending. If one partner treads too close to the line, blowing the budget on clothing or technology, the other is there to rein him or her in.

One thing she doesn't mention is income. Are married households more likely to earn more than non-marrieds because at least some of them have two-earners in the family? If so, this could explain some of the difference.

That said, there's no denying that two can often live cheaper than one. Couples share a wide variety of expenses that would cost two individuals twice as much (real estate taxes, home maintenance costs, etc.) And yes, there's that "check" that goes on in spending (assuming the couple decide at least major spending issues together). As we've discussed so many times here, if you can keep your spending under control, you go a long way towards growing your net worth. And it appears couples have a built-in method for at least controlling some of their spending, so they start off with an advantage.

I also buy the "working for a higher goal" argument. I know we keep spending low and savings high -- and part of that is so we can provide a college education for our kids. We (obviously) make decisions on what to buy and not buy based on the good of our family. How could we not? As such, that likely contributes to our net worth in a positive manner.

One last thing I would add that could be influencing these results: two people are often smarter than one. Yes, there are exceptions, but in general almost any two people (IMO) will make better decisions on what to buy, save, invest, etc. than one person alone. Two people have different perspectives and often make up for the other's lack of insight, intelligence, or "blind spots", helping them to ultimately come to better financial decisions.

That's my two cents. What's your take on the issue?

Comments

[EXS]

Really depends. I have both double-income couple friends (w/ and w/o kids) and single friends who have credit card debt, scant emergency/retirement/529 funds, can't afford to buy a residence, etc. I'm single and make more than some couples do, less than other couples. Knowing I likely will only have myself to depend on for future financial security, I try to be responsible now (no cc debt, year's emergency fund, save/invest on top of maxing out 401(k) and IRA, own my own place, etc.) There are tradeoffs: I can't split my housing/utility costs with anyone, but other costs are less (food, cable--I don't have to have a premium package a partner might want, for example--my apartment is smaller, no children's expenses, etc.) When I'm in a relationship, my living costs tend to increase.

[Crystal]

My husband and I definitely have a bigger nest egg than we would if we were single. In our case it's mainly because of all of the above...we are both frugal, share the costs of living, and have joint goals we work towards. The goal of early retirement for both of us really pushes us to save...it would be a little boring to be retired without him since frequent romantic vacations and trips are a big part of our retirement plans.

We keep ourselves in check pretty easily by simply having budgeted "fun" money...we each get $75 a month for individual fun expenses (which we can carry over if we wanr) and $100 a month for joint fun expenses like movies and date nights (which gets put in the vacation account if we don't use it all). That plus our $250 a month vacation account keeps us happy and we can hoard the rest. :-)

If I were single, I would not be able to save nearly as much for retirement or have any extra for fun. Right now, we save about $21,000 a year for retirement. I only make about $27,000 after taxes.

Heck, I would need at least 50% of my take home pay just to survive in my own apartment and 80-90% if I wanted to own a home. My husband would be in a similar position since he makes about $36,000 a year after taxes but spends a little more than me in general.

Yep, marriage is a wealth maker. But, divorce is a wealth negator. Make sure you pick your mate wisely. :-)

[Jessica]

Married people also get a lot of government welfare as significant tax advantages. There are about 1138 special laws that give married people societal preferences, such as access to health care, special treatment laws (can't testify against your spouse, you're not harboring a fugitive if it's your spouse, etc), as well as tax advantages.

Married people also have access to each others social security and pension. For example, if your wife never worked outside the home, contributed NOTHING to FICA, and, obviously doesn't have a pension. However, when you kick the bucket, she still collects your social security and pension. When a single person kicks off, their pension and social security goes back to the pool.

[MC]

I agree with EXS--I think the stat mainly arises from having 2-income vs 1-income per household.

Because there are almost an infinite number of expenses associated with being married!

1) being in a relationship is more spendy than being single (all those "date-nights"),

2) As a woman, I eat very significantly less than a man, and I'm more likely to eat cheap (salads, vegetarian meals) rather than steak if I'm by myself. So when I'm dating someone or living with someone, I spend way more than 2X my normal amount on food.

3) Married people typically feel they "must" set up a home with all that entails, whereas single people are usually more likely to be happy with those old sheets, furniture from their folks, etc.

4) What about that typical $30K wedding? The wedding/honeymoon is a huge expense that single people don't have to pay.

5) Married people are more likely to buy a McMansion if they purchase any kind of a home.

6) Hello, who is more likely to have kids? Nothing is more expensive than children!

7) Oh and divorce always hovers. Not a risk if your single!

[MC]

Another thing: Married people are going to have more "non-negotiable family-related travel" than single people. As in, "we must visit my parents this summer in Seattle, and your parents at Christmas in Virginia". And you have to go "home" for all the family marriages and funerals, and possibly to visit/take care of ailing relatives, for two families.

[Crystal]

Just to be a devil's advocate to MC's posts:

1) I spent more when I was single...my college friends were much more expensive to hang out with than my husband and the friends we have made since then.

2) Sorry guys, I can't argue this point...I eat less when I'm not eating with my husband (although I still would have that steak...probably just half though).

3) I'm a tomboy and I married a guy who is pretty laid back when it comes to stuff like furniture...we definitely haven't bought anything for the house that I wouldn't have needed anyway. We still use mostly hand-me-down furniture and love it.

4) Our wedding cost $3000 including the dress and everything, and it was split evenly between us, my parents, and his parents.

5) We both wanted to buy an inexpensive home since the bigger ones require more upkeep (in general).

6) My husband is an 8th grade Science teacher...that is a form of birth control in and of itself. No plans for kids.

7) Divorce is a possibility, but I never think of it as hovering. But you are absolutely right, if you are single, there is no risk for divorce...that just seems like a silly reason to me...like cutting off the nose to spite the face kinda' thing...

Lastly, I agree, you do have other family to visit. Ours is all within 45 miles of our home, so it isn't that long of a drive. But, even if they lived out of town, is visiting two families so bad? I actually like my in-laws...

[Old Limey]

Raising children can be very expensive these days, but it doesn't have to be.
One could write a book about the myriad of benefits of being married (until death do us part). The benefits are both tangible and intangible. As someone that married his childhood sweetheart and is still married 53 years later I can't imagine my life if I had remained a bachelor. Marriage is "Teamwork Personified" and one's partner in marriage is also one's best friend and confidant and is there to share in all major decisions, and all major events, both good and bad. The old proverb, "Two heads are better than one" is very true. Having said that, I realize that not all marriages are made in heaven and that being in a bad marriage can be like Hell on Earth.
I can see why married couples have done better financially than single or divorced people. My wife and I are opposites in many areas. You may think that isn't good, but on the contrary it means that we aren't competing to take over the same task and responsibilities - instead we each do what we do best.
The only problem I see now that we are both in our seventies is that when one of us goes, the other is left with a lot of things to do that they have never done, never wanted to do, and are not good at. However, being wealthy can alleviate the majority of those issues.

[MattJ]

Single fella here.

****Married individuals had nest eggs 93 percent larger than single or divorced folks****

That statistic would be more useful if it compared single and divorced folks separately. As it is, it tells me nothing, really.

I have no trouble saving for my future family despite that I have no family yet. Similarly one would expect divorced people to also be saving for their children's college education and whatnot. Two years ago, I was saving for my first home, now I'm paying down my mortgage debt. Despite that I'm not married. I give to charity despite having no wife or kids. (seems bizarre to me to suggest that this would have anything to do with it, really) I also want to retire comfortably - I had not gotten the memo that suggested that single people didn't need to worry about that. Perhaps that memo only goes out to divorced folks.

Chatzky's explanation seems to be pretty poor, is what I'm getting at.

[Old Limey]

@MC
Nice Summary! Here are my comments.
1) I was never a "Single", I went straight from my mother taking care of me to my wife taking care of me, and wouldn't change a thing. I can't cook and don't want to learn.

2) We eat the same meals and my wife now knows just how much to cook so that there are no leftovers.

3) Neither of us like communal living, we each like our privacy, and we love our beautiful secluded garden.

4) We had 50 guests at a nice restaurant, my aunt made the wedding dress, I bought a new suit, borrowed my father's car, and we had an inexpensive honeymoon.

5) We have a 4br, 3ba ranch style home on 1/3 acre - definitely not a McMansion.

6) You're 100% correct, the first was a surprise, the second one was planned, the third was another surprise. That's when I made sure there would be no more surprises.

7) Divorce can be a catastrophe both emotionally and financially. One daughter is on her 3rd. husband, the other daughter is divorced and will probably become a "significant other" one of these days. The son is on his first wife and I think it will last. When I left England in 1956 the word "Divorce" was not in my vocabulary, now unfortunately it's way too common.

[Jill]

This article makes it sound like single people lack discipline and goals. I know many married couples who believe in denying their household nothing and spend like crazy to create a "happy" home. I know other couples who hide their expenses from each other. And I don't think two incomes explains it all. My best friend pretty much turns around her whole paycheck to pay for daycare - essentially paying...to go to work. I'm single and am more financially responsible than many married folks I know.

[Robbie]

Marrieds can also be in bad shape too. Especially in a typical spender/saver relationship. We do have a little put back for a rainy day, but it sure isn't much and it seems like the money is always gone before the month is. One person scrimps for a little breathing room, and the other sees the extra money and believes things are ok to go shopping.

I guess in general though it makes sense...

[BD]

I wonder if its because *on average* people who are more successful at life tend to get married? In my limited experience, most of the single people I know (including myself) are broken in some way (health problems, mental problems, etc.) which limits their ability to both earn, and find a good spouse. Whereas my friends who are beautiful, mentally sound, gregarious, outgoing and healthy had no trouble using these said traits to find both high-paying jobs and wonderful spouses, which in turn, allows them to have large nest eggs.

[Crystal]

I disagreed with some of Chatzky's comments, but I took FMF's post to mean that if all else was equal, a married couple would have a bigger nest egg than a single person.

That's what I think...two frugal people with jobs will have more saved than one frugal person with a comparable job. Two heavy spenders that don't save will not have as much as one frugal person who does.

[Tyler]

I am single.

If I were married right now, my spending and saving would be entirely different. My risk profile for everything would be different- 'maybe going heli skiing is a bad idea'. I would save more, because there is more to save for.

Assuming duel incomes for at least part of the marriage, being married allows for the splitting of the fixed costs in life (house, heat, etc).

Dating and being social is super expensive. This part of my budget would cut in half if I were married.

Motivation to save increases + sharing of life's fixed costs + decrease in expenses= higher savings rate

BUT... shouldn't you divide the savings by number of people? (2 vs 1) If you did so, married people should have 100% more savings than single people to be equal. This statistic says they only have a nest egg 93% bigger than single people. SO... married people actually UNDER SAVE on a per person basis by 7% (ok, 3.5% single to single).

[Beastlike]

I disagree w/ the divorce thing.... Most likely, one person will be worse off and one will be better off, i.e. Tiger
Woods will be worse off, but the wife will be much better off. Statistically, I don't think it would make a big difference.

Considering my wife and I make the same, we are way better off married than single! Our main expense, mortgage and taxes paid w/ 2 salaries.... Food and other stuff is negligible...

[Crystal]

Tyler, I was surprised it wasn't at least 100% or more...I can easily say that my nest egg now is at least triple of what it would be if I were single...

[Tyler]

Off the top of my head, I can find at least $1,000 of synergistic savings per month if I were married with 2 incomes. That's 12,000 per year that I couldnt spend if I wanted to and would be saved.

[Rod Ferguson]

Okay - gotta chime in on this one. One factor not considered is the income overlays. If a single person becomes unemployed, then they must rely on savings (drawing down wealth) or the kindness of family and friends to survive. If one of a couple becomes unemployed, the couple has the income of the other to rely upon - assuming both worked, of course. Being married to a spouse who works is automatically having that "second line of income" FMF refers to on occassion (and as someone who has had to rely on his wife's income to survive in the past, it's a real benefit). While we didn't save anything during those periods, we didn't decrease our savings either. As Crystal mentioned, they pretty much live on one salary and save the rest. At the rate they are going, they will probably be able to retire in their early 50's. While a single person can accomplish this, it's a lot harder to do on average.

[Terry]

I've seen figures suggesting that married men earn 50 percent (or greater) more income than single men, controlling for other factors like age and education.

Of course, they also have greater incentive/prodding/support than single men to earn more.

But I think there might be a chicken-and-egg relationship which is difficult to break into its components: poor men (other than graduate students) are considered unable to adequately support a family and thus unmarriageable, so they are likely to be and remain single and thereby drag down the numbers for the group.

[MC]

I agree with Tyler--the correct stat to compare should be savings per person, not per household. Married people will need more than a single person to retire, perhaps 2-times more.

While married people can live more cheaply than single people during retirement, they also have to anticipate dealing with twice the health care/prescription bills as a single person would, and also with the potentially catastrophic run down of one partner's finances if/when the other has to use gov assistance for long-term end-of-life care.

[Crystal]

But MC, a single person retires and has to deal with presciptions and end of life care...how is it worse for married people? If anything, the married couple can put off retirement homes longer since a healthy partner can take up some slack.

In our case, we'll be able to get Texas Teachers Retirement insurance through my husband's retirement plan, which would be much cheaper than me trying to get insurance on my own after age 60.

A good, financially sound marriage is hard to beat. Granted, a loveless, financially unstable marriage would be hell on earth. Thanfully, good marriages do exist.

[mysticaltyger]

@BD....I think you really hit on something there.... People who get married and stay married tend to have more social/emotional intelligence than life long singles and people who divorce. And as you said, that social intelligence translates into higher incomes and higher net worth.

[Jessica]

@BD & @mysticaltyger

Perhaps you should read "Singled Out" by Bella DePaulo, which will debunk all of your single-person stereotypes.

It is still socially acceptable to discriminate against 42-47% of the population (not a minority).

[Mike Hunt]

One thing that hasn't been mentioned before: I've been able to get a better job being married compared to when I was single beforehand. I'm talking about a GM (General Manager), MD (Managing Director) or CEO type position in a small to medium sized company. For some reason I got the feeling that when I was single it was harder to be taken seriously for a position of great responsibility, like managing an organization of 500+ people. However after getting married (no kids yet) this was a lot easier to step in to. Was this a coincidence? Maybe but I don't think so.

-Mike

[BD]

Jessica, in case you didn't notice, I did mention in my comment that *I am single*. You make it sound like I'm some married person looking down my nose and stereotyping all singles. I'm speaking from experience here.

[Bella DePaulo]

Thanks, Jessica, for recommending my book, SINGLED OUT. If I had read that awful excerpt from Jean Chatzky, loaded with singlism, I would have made fun of it in the book. She is right about economies of scale but little else.

Jessica is right about all the government give-aways that only officially married people receive. Terry is also correct that married men make substantially more than single men, even when both the married and the single men are equal in seniority and accomplishments; that adds up to discrimination against single people.

As for who is more giving, in most ways, the answer is single men, not married men, as I also document in Singled Out. I also have a chapter on the science of marital status (Chapter 2). The suggestion that singles are more likely to be “broken” in some way, whereas getting married makes people happier and healthier – more mythology. Social/emotional intelligence? Uh, I don’t think so. There was a recent study about psychological resources of single people:
http://www.psychologytoday.com/blog/living-single/200912/men-and-women-who-have-always-been-single-are-doing-fine

I wrote about financial issues in more detail in these 2 posts to my Living Single blog:
The economy: A single person’s vulnerability that is real (Posted October 7, 2008)
http://www.psychologytoday.com/blog/living-single/200810/the-economy-single-persons-vulnerability-is-real

The Marriage-Promotion Claim that Is Right – for All the Wrong Reasons (Posted April 2, 2008) http://www.psychologytoday.com/blog/living-single/200804/the-marriage-promotion-claim-is-right-all-the-wrong-reasons

This has been so eye-opening. I had no idea Jean Chatzky was so full of it.

--Bella DePaulo

[Mike Hunt]

Bella,

Great articles, thanks for the links!

I really think there is some truth to this, married individuals earn more than singles. Haven't seen any comprehensive and statistical studies on this but it really seems to be the case.

-Mike

[FMF]

Bella --

Not sure if you meant to be or not, but you sound bitter. IMO more people would listen to your point of view if you would soften your tone a bit.

[Crystal]

I have to second FMF, I stopped reading Bella's post when it said "If I had read...I would have made fun of it".

IMO, if you have to make fun of other people's opinions to get your point across, your point will seem like its not good enough to stand on its own.

[Rod Ferguson]

I have to third FMF - if Bella's tone is indicative of being single, perhaps her research might be a bit biased. Anyone know if it's case studies she's using or meta analysis as her data base?

[J in FL]

Btw, just an observation here...

I would think that most readers/commenters on this blog are not representative of our population as a whole, and so it's not surprising to see single people here say that they are great savers, as well as married people.

Let's not forget that usually the books that FMF quotes use broad statistics that generally do hold true for 300MM Americans, but not necessarily the small sample population that actively reads this blog.

[Old Limey]

Re: Married employees earning more than single employees - I have actually been told by my supervisor during an annual performance review that he tended to favor married employees especially when he knew that that they were the sole breadwinner in their family. If you think that's unprofessional I had a manager send an e-mail to everyone in his department telling them how they should cast their vote in an upcoming local election. He only did that once however because complaints were made to his boss.

[Meg]

Old Limey, I've been told something similar, but with a twist: one of my bosses said that he preferred married employees, particularly men, because they were easier to keep in line. They were willing to put up with much more crap if they were the sole breadwinner. It wasn't exactly a compliment.