If you're a gay couple who have been together for several decades and are nearing retirement, get married.
That's the simple advice that emerges from a new book by James Lange, a certified public accountant and attorney who specializes in retirement and estate planning. Of course love and feelings should dictate your decision first, but if you're looking at the financial side of things, then the balance has shifted in favor of marriage since the Supreme Court decision a year ago abolishing the Defense of Marriage Act, Lange argues.
"I hate to be that mercenary, not recognizing the value of love, but that's the financial truth," he said in an interview. "I want to scream to gay couples who've been in long-term relationships for a very long time: `Hey dummy, protect your partner and get married!'"
In "Retire Secure For Same-Sex Couples," Lange explains why marriage would benefit an aging gay couple: higher Social Security benefits, avoidance of inheritance taxes, more room to shelter income in individual retirement accounts. Combining all the benefits now available under favorable laws and rules, a married gay couple's assets can exceed those of an unmarried couple by $2 million at age 100, assuming they both started at the same financial point, Lange shows.
There are some caveats. The infamous marriage penalty, which increases the tax burden of a power couple with two high incomes, applies to gay people just as it does to straight folk. For a couple making $100,000 each a year, the penalty isn't big enough to tip the balance. At $400,000 a year each, the math becomes too big to ignore.
Also, if you live in one of the 30 states that don't recognize gay marriage, some of the benefits don't apply. Lange believes more and more rules will change to make them apply. Meanwhile courts and legislatures in those states are slowly moving toward legalizing gay marriage.
For couples further from retirement, it can be tougher to weigh the long-term benefits of marriage against the immediate tax impact of the marriage penalty. My husband and I didn't have financial considerations in mind when we decided to get hitched; it was all about love. Because DOMA hadn't been repealed yet, we had scant financial advantages to consider.
After reading this book, and as the landscape changed radically in the past year, I realize we've made a great financial decision as well. Because my husband is back in school to change his career, we get a marriage bonus in our taxes. But even when we start paying the tax penalty as his income resumes, I calculate we'll still come out on top in the long run.So OK, you still have to first take love into consideration. But if finance is also playing into your decision, Lange's book should be at the top of your reading list.